Five Things to do Five Years Before Retirement:
So much planning, so little time, but if you only can complete five items this week, here are our top choices:
#1 Prepare your retirement budget
How much will it cost to live for one month in retirement?
Don’t know? – Now is the time to figure it out!
Use a credit/debit card, print off last month’s statement and dig into the details. Ask yourself if this month fells like an average month you might have in retirement.
“Does this seem like an average month?”
#2 Map it out
What will your spending patterns look like throughout retirement? Will you see the world the 1st five years of retirement, then settle down at the lake cabin for the next twenty-or so years? Different activities have different costs, and we need to plan accordingly.
#3 Know your benefits
Visit www.socialsecurity.gov and print off your estimated benefits statement. Knowing your benefits is a crucial step to building a retirement income plan. Paper statements stopped in mid-2011 & started up again in Sept of 2014. The Social Security administration will send you a paper statement every five years (age 50, 55, 60, etc.) The Social Security Administration still encourages beneficiaries to create an account online.
Have a pension or other employer-sponsored benefits? Check on your spousal and health insurance related options. Being familiar with the benefits you may or may not carry into retirement from your employer is a key step toward retirement preparedness.
#4 Look at your debt
How would your budget look without a house payment? Could a few extra payments per year pay off your house by retirement? Being so close to the retirement finish line doesn’t leave a lot of time to take advantage of compounding interest, perhaps reducing or eliminating a loan will free up some retirement income sources for other (more fun) things, or keep the funds in your plan longer (hopefully earning you interest).
Also, nagging credit card debt could be a symptom of not having a solid grasp of a monthly budget. Something that will prove hazardous once you are living off your savings.
#5 Have a retirement plan B (and C)
How would caring for loved ones change your retirement plans? Are your children self-sufficient? While it is difficult planning for the unknown, it is never a bad idea to have a contingency plan.
According to a recent Pew Research Center study:
- 36% of young adults ages 18-31 are now living with their parents
- 21% of middle-aged adults have provided financial support to a parent age 65 or older in the past year.
- 15% of middle-aged adults are providing financial support to both an aging parent and a child.
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