Retirement is drawing near, and, though you’ve been preparing for years, you may suddenly be concerned that you haven’t covered all your bases or that you aren’t actually on track to retire at all. We see this often with people nearing retirement age. Not to worry, though! Educating yourself on what to expect and what to look out for will go a long way in your retirement planning. To help get you started, here are eight things to consider when you’re ready to retire.
1. Try to Pay Off Any Debt First
Living a debt-free lifestyle can be a great financial decision at any age, but especially when you’re nearing retirement. You will likely want to go into this phase of your life knowing that you aren’t paying unnecessary interest payments. To make your retirement funds last as long as possible, it’s important that you find areas of your budget, such as debt, that could drain your accounts quickly without returning any benefit to you. You don’t have to be afraid of spending, but eliminating those monthly debt payments can help you feel more confident and help reduce those annoying bill reminders.
2. Consider Your Living Expenses
There is no set number for anyone when it comes to how much you should save for retirement. You can’t rely too heavily on rules of thumb, as your situation will likely be unique, depending on your age, location, daily life, hobbies, spending habits, and so forth. What we can say is that many estimate that you spend 20% of your current income on work-related taxes and expenses. So, it would stand to reason that you should consider saving in a way that allows you to spend around 80% of your pre-retirement income.
3. Don’t Forget About Your Discretionary Spending
Your primary focus will most likely be your daily living expenses when you’re thinking of how much you’ll need for retirement. However, don’t forget that you may have plenty of time on your hands to explore your interests and hobbies! Retirement can be your time to enjoy the hard-earned money you made in your working years. Consider saving some of your funds to act as your disposable income.
4. Consider Your Health Insurance
While retiring early may seem enticing, consider that leaving your employer’s insurance plan before you qualify for Medicare may put you in a compromising position. Especially as we age, we want to be sure that we can cover any unexpected health expenses that come our way. We’ve outlined what to think about as it relates to your healthcare insurance and expenses if you do decide to retire early.
5. Review Your Beneficiaries
It’s always a good idea to check in on your accounts regularly to see if your beneficiaries should remain the same. Life can change a lot from year to year, so it’s important to know who your beneficiaries are for your estate planning.
6. Look Ahead to Big Expenses
If you’re nearing retirement and you know that you’ll have to make some big purchases soon, it’s important to plan for those now. Big-ticket items, such as your home’s HVAC, roof, windows, or even a new car, can push you back financially if you buy them before making a plan. See how these work with your pre- and post-retirement budget and determine the best time to make the purchase.
7. Build Your Emergency Savings
Your emergency fund can help you protect your retirement savings and hopefully keep you out of debt. It’s recommended that you save three to six months of your living expenses to use for emergencies, such as unexpected health issues, natural disasters, car accidents, etc. It’s up to you and your family to decide what you deem an emergency, as everyone’s definition will be different. By building up these savings, you can be prepared for the unexpected and help keep your financial strategy on track.
8. Meet with a Financial Advisor
Meeting with a financial advisor can give you an outside perspective into how prepared you are for retirement and what you should be doing until your last day of work. An advisor can be your ally to help you feel more comfortable in your retirement preparation, and they’re there to answer any questions you might have along the way.
Prepare for Retirement with Southwestern Investment Group
Are you ready to prepare for retirement? Whether you’re twenty years away or one year away, we can help you feel more positive about your financial future. Contact Southwestern Investment Group today to schedule a consultation!
