You may have a vague age or year in mind when you are going to retire, but have you ever thought about what you are going to do during your final five years of work?
What many people don’t realize is that you should start thinking about and preparing for your retirement years in your 50s and not when it gets close to retiring or when your employer starts offering retirement incentive packages. Thinking five years in advance can be an overwhelming task, especially for people focused primarily on their work and not on their retirement future, but it can be done.
Retirement planning is all about your current financial situation, your desired lifestyle, the size of your nest egg and your end goal. What will make you happy and fulfilled during this period of your life?
Your retirement is a big milestone in your life, but it can also be a difficult transition. The way you work, your social relations, your finances, your health… there’s a lot to think about five years from now! It is important to prepare for retirement to make this transition easier.
Here are some things to do during the next five years before retirement:
#1. Create Your Own Legacy
You should think about how you want your legacy to be after your retirement. What will people remember about you? Do you want them to say that you were a leader, a mentor, or someone who gave back to the community? You can start planning for it now by choosing an organization that aligns with your interests and skills.
#2. Plan Your Next Adventure
While you may be excited about retiring and exploring new places, it might be difficult to know where to start. You should start planning for your next adventure as early as possible. Do you want to travel the world? Maybe hike up Mount Everest? If you don’t make plans, you may find yourself waiting for the next big thing.
#3. Start Exercising
It is incredibly important that you take care of your health. The last thing you want to happen is that you become sick or develop a debilitating injury just before retirement. You should start working out gradually so your body can get used to the change in activity level.
#4. Pay Off Your Debts
Look at current debt levels, your borrowing trends and your savings account balance. It is important to have enough money to cover emergencies after retirement. If you have credit card debt, start to pay it off as soon as possible so you can reduce your interest payments and give yourself more freedom during retirement. Pay off debt before retiring OR keep working. Think of it this way: your income is going to drop when you retire. Is it easier to pay off bills / debts with your current high income OR later when you’re earning less? Simple. Right? Pay off debt now.
#5. Organize Your Financial Affairs
Start organizing and cleaning up your financial records, tax files and credit card statements. It is also important to review all of the investments you currently have and start thinking about how you want to invest your money once you retire. You can also start thinking about which investments you should sell or keep over the next few years.
#6. Review Your Will And Estate Plan
Do you have a Will & Powers of Attorney? If your loved ones are listed in the will then they will inherit whatever you leave behind. Have any of them changed their last name since the will was written? Do you insurance policies still show your ex spouse or deceased parent? Do you have a disabled child or perhaps a spendthrift. Consult your planner for ideas. Plus, write out [and share with the kids] your wishes for personal items like photos, art, your piano, your car, furniture, etc. One kid may want Gramma’s china service.
#7. Check Health Benefits Post-Retirement
It would be wise to save up your money in order to cover medical expenses in the event of an emergency or sudden illness. If your employer plan will not offer health benefit plan after you retire, arrange an individual plan within 30 days of retirement to avoid medical underwriting. These plans can cost north of over $300 / month. You need the coverage but this is a new budget item.
In conclusion, it’s never too early to start planning for your retirement. Think about what you want that period of your life to look like and take steps towards making it a reality now.
We specialize in assisting people in preparing for retirement. Allow us to evaluate and review your retirement income sources and assist you with retirement planning. Call us at 1-888-554-6661, or click here to book a virtual Zoom meeting.