Retirement is an exciting milestone that many people look forward to. After decades of working and saving, you get to enjoy your golden years and pursue hobbies, travel, or simply relax.
However, retirement also requires careful planning to ensure you are financially prepared. If you are about 10 years away from retiring, here are five important things you should do to get ready:
1. Review Your Retirement Savings and Determine If You’re on Track
Ideally, you should have 6-8 times your annual income saved by the time you retire. Review your current retirement accounts, including 401(k)s, IRAs, and any other savings, to see if you are projected to reach your retirement goal.
If not, you may need to increase contributions or change your investment strategy to grow your nest egg. Use online calculators and meet with a financial advisor to crunch the numbers and assess if you need to make adjustments.
2. Pay Down Debt
Entering retirement with a mortgage, car loans, student loans or credit card balances will significantly eat into your nest egg.
Make paying off high-interest debt a priority and have a plan to pay off any remaining balances in the next 10 years.
This gives you time to aggressively pay down debts so you can retire with minimal monthly expenses.
3. Have a Written Retirement Plan
Work with a financial advisor to develop a written plan for your retirement years. It should detail projected retirement expenses, income sources like pensions and social security, tax strategies, healthcare costs, and an investment strategy for your savings.
Having a plan provides a clear roadmap and ensures all aspects of retirement are addressed so there are no surprises down the road. Be sure to build in contingencies for unplanned expenses.
4. Delay Social Security Benefits
You can begin claiming Social Security benefits at age 62, but delaying until your full retirement age (66-67 years depending on birth year) or even age 70 will significantly increase the amount you receive. As life expectancies grow longer, it makes sense to delay taking benefits as long as possible while supplementing income from your retirement savings. Coordinating the timing of Social Security with other income sources is an important part of maximizing this asset.
5. Consider Relocating or Downsizing Your Home
Moving to a smaller home, less expensive area or senior living community could be a smart strategy that reduces housing costs and prepares you for retirement.
If you relocate, research things like cost of living, tax rates, healthcare services, weather and recreation in potential areas.
If downsizing, get your home ready to sell by decluttering and making any needed repairs. Give yourself enough time to sell your current home and get settled in your new location before retirement begins.
The Bottome Line
The decade leading up to retirement requires diligent preparation but taking these steps now will pay off with greater security and peace of mind as you embark on your golden years.
Consult trusted financial professionals, evaluate your specific situation and develop a robust retirement plan tailored to your goals and needs. With prudent planning, you can ensure you are ready to comfortably enjoy the fruits of your lifetime of hard work.