5 Things You Must Do Before Reaching Retirement Age

Everyday we clock in and out of work and the dream of retirement and the future of our money and our finances grows stronger. Retirement is what most of us work towards. The glorious time of retirement is to make up for whatever you have missed in your regular life and to truly indulge all your desires without any hard commitments. Many people plan for vacation homes, endless golf courses, and the simplicity of just knitting. With all the glory and joy of retirement, there is definitely a financial responsibility with tons of planning involved.

Create Your Plan For Retirement And Finances

So what is it exactly that you have been dreaming off? What is the dream that has pushed through your days and years and hours of work? Define your retirement clearly and thoroughly. List all your goals and rank them accordingly. Create a pro’s and con’s list. Speak with your partner and family thoroughly and find out exactly what you are looking to accomplish. Once you are clear in your plan, you can then build on your plan and financials. Once you are clear – you should list out the cost of each of your plans and move on from there. Budget your plans and rank from there to find out what is absolutely necessary and what can be cut out.

Save Money For Living Costs

The rule is to assume 60-80 percent of your current salary is to be used during retirement. However, don’t take this rule in its entirety. It is best to analyze your bank statements and credit card purchases for months and understand what you are spending on and how much. Look to see where you are spending, and see if those costs will transition into retirement. Or perhaps, you will be adding costs for travel or a vacation home. Further, plan for inflation. Know what you are saving now, and add inflation percentages for when you retire.

Think About Health Care Costs

One cost that was minimized during working years and will be higher in retirement is health care costs. Whether there are unforeseen surgeries, caretaking, or medicinal costs – our health decreases with our age and will incur greater healthcare costs. To assume that Medicare will take of you is is naive, considering the insurance process is complicated and is not completely inclusive of all medical services.

Make Sure You Have The Investments To Retire

The first thing you should do is calculate how much your expected stable income will bring. This included 401ks, pensions, Social Security, returns on investments, and annuities.  Be careful of Social Security, as taking money out too early can put a dent in your funds later in life. Make sure you are educated in how Social Security works and the effects of when to take out funds for maximum benefits. Further, be sure you are planning accordingly with your savings account. As a rule of thumb, do not take out more than 3-4% from your nest egg at once.

Put Your Entire Retirement Plan Into Action

Make sure you are on top of your retirement plan. Once you have completed the four steps above, you are well on your way to a successful retirement. However, be aware that retirement has different stages within the time period. Make sure you are clear on your financial needs within each stage, and plan for each with sufficient funds. I recommend reviewing this plan every 4 months for optimal utilization.