It’s getting close, very close! For most of your adult life you’ve planned for retirement and now that you’re in your 60s, it’s very close indeed. Are you getting ready? Will your transition be as smooth as possible? Will you start this new chapter in your life with a sense of optimism?
Like many people, you may not be so sure. A 2019 economic-well-being study published by the Federal Reserve indicated that just 45 percent of non-retired adults over the age of 60 believe that their retirement planning is on track. What’s more, 60 percent of non-retirees who hold a 401(k), IRA, or other self-directed retirement savings accounts aren’t comfortable managing their own investments.1
We recommend making two checklists: one for your lifestyle, and the other for financial matters – to assess your situation and help determine the steps you need to take as the countdown continues.
Your financial checklist
When it comes to finances, you’ll have another long list of items to tackle. Breaking it down and working on certain tasks one at a time will make it more manageable. Depending on your situation, you’ll want to tweak your checklist as you go along.
- Adjust your portfolio. Work with a financial advisor to test your portfolio’s ability to meet your needs, not only through your predicted life expectancy.
- Project your income. Make a realistic assessment of your current spending, making sure that covers everything. Then, project how much income will be available at your retirement date from your Social Security, investments, and pension (if applicable).
- Research insurance. Because health insurance is often expensive, you’ll want to research the cost, especially if you plan to retire before your Medicare eligibility at age 65. For 2022, the law says you never have to pay more than 8.5% of your income for an Affordable Care Act premium.
- Reduce debt. Another way to enhance your cash flow on a long-term basis is to pay off all your high-interest debt, or as much as you can.
- Evaluate your budget. In the 12 months prior to retirement, do a dry run to see if you can realistically live on your fixed cash flow. If it doesn’t meet your needs, then you’ll have to make adjustments.
Your lifestyle checklist
Starting to plan now will allow time for careful thought, discussion, and some trial and error. Retirement is a major life transition, and you need to be patient with yourself and your spouse.
- Test your vision. It is encouraged that you “practice” being retired. For example, if you and your spouse dreamed of buying an RV to travel the U.S., rent one first to learn if travel and togetherness make sense.
- Plan your days. Envision what a typical day might look like. Will you work part-time, volunteer, travel? Too many people retire without a plan for those many hours and find themselves feeling lost and/or depressed.
- Consider where you’ll live. It’s important to put careful thought into your living arrangements, and then take action. Will you downsize? Start preparing to sell your old home and purchase a new one.
- Explore new places you’d like to relocate to. If moving is for you, then visit the areas that you’re considering, both during their peak and in the off-season.
- Reset the details. Once you are retired, update wills and legal documents in your new place of residence. Establish a reliable local network of professionals (doctors, banks, attorneys, etc.). Update your contact information and enjoy life!