Retirement is something most of us hope to do someday, yet it’s so easy to put off planning for it. You’ll want to focus on financial planning, but that’s just one component of a well-rounded, happy retirement.
Today we’re sharing 9 to-dos you’ll want to check off before you retire – many of them as soon as you can!
1. Ask Yourself Key Questions Early On
How will you spend your days, and where? Do you want to travel? If so, how much? What do you think will make you feel most fulfilled in retirement? These are the kinds of questions to start asking yourself between the ages of 50 and 55.
If you’re married or have a partner, you’ll also want to have a heart-to-heart about what he or she wants out of retirement, too. How do each of you think things will change when, probably for the first time ever, you’re both available all the time? How will you balance time for just the two of you, with friends, and with family?
It might be helpful for you both to write down your retirement dreams and goals, then label each one as a “must have” a “want” or a “wish” – and be prepared to compromise.
2. Take Stock Of Your Health
Get those checkups and preventive exams in now; this includes everything from your yearly physical to regular teeth cleaning. Begin or stick to an exercise plan, healthy eating, and getting enough sleep. To keep yourself mentally sharp, start incorporating plenty of brain games, puzzles and books.
And don’t forget to keep in touch with family and friends to help you maintain your physical and mental health – retirement is a big life change and you’ll be glad you’ve laid the groundwork for a solid social support system.
3. Prepare Your Balance Sheet
Now is the perfect time to determine your net worth by preparing a balance sheet detailing your assets (personal possessions of value, such as cash, real estate and investments) and liabilities (debts and legal obligations).
It’s easy to create your balance sheet, too – simply use Excel or even a simple notepad.
4. Get Rid Of Debt
Ideally, we’d all want to cruise into our retirement years with no debt. If this isn’t possible, start paying down your debts with the highest interest rates – typically, these will be your credit card balances, followed by car loans.
Your mortgage will most likely have the lowest interest rate, so save this one for last. In general, the best practice is to look at your mortgage’s effective rate and compare it to the after-tax yield on what you could earn with the money you’d otherwise be using to pay off your mortgage. Once you retire, you won’t have employment income so you’ll be using savings to pay it off. Keep in mind that using your retirement accounts to pay this could have very negative consequences.
5. Create Your Retirement Budget
The first step to creating your budget should be tracking your income and expenses for at least a couple of months. Then it’s time to be realistic about how much money you’ll really need in retirement to support your lifestyle.
Next, review your investments. Are you diversifying your money into multiple investments, keeping your investments to things you understand, and going with investments that won’t charge excessive fees?
The budget you ultimately create should include:
- The amount it will cost to reach your retirement goals
- The amount of money coming in
- How much debt you have
6. Tackle Your Housing Needs
As you get closer to retirement, think about what you’ll need in the future. This might mean doorknobs and faucets with easy-to-use lever handles, or a shower with a low threshold and shower seat.
Whether you have a one or two-level home, you can still make it work in retirement. For instance, if you have a staircase without landings or changes in direction you can install a chair elevator.
Keep in mind that larger homes can become an issue for retirees because of the maintenance that comes with them.
7. Plan Ready For Life’s Curveballs
Sometimes life’s events can catch us off-guard, derailing even the best-laid plans. That’s why you should prepare for the unexpected now. Ask yourself how you’d pay for a serious illness or even just a leaky roof. Don’t be afraid to have a frank discussion with your loved ones.
8. Update Your Estate Plan
You’ll need an up-to-date power of attorney and advanced medical directive. Keep in mind that some accounts fall outside of what’s written in your will, like annuities, joint accounts that transfer on death, pensions, IRAs, and life insurance payouts. It’s possible your estate executor could have no funds to carry out the decedent’s wishes.
To prevent this from happening, it’s best to review your wills and your accounts every five years. Keep track of the beneficiaries listed on the will and your other accounts, too.
You might also provide a letter of instruction to the executor, making it clear who should receive which personal heirlooms. This letter isn’t a legally-binding document, but it’s still very helpful and can lessen the stress on your family.
To make the process easier, also consider listing your personal data, including Social Security number, date of birth, numbers for your bank accounts, names of your attorneys, insurance policy numbers, the location of a copy of the will, and burial arrangements.
9. Bring College Expenses To A Close
You absolutely should not put your retirement contributions toward your children’s college expenses. There are plenty of other options available to fund this, including student loans, grants, scholarships, and student work programs. Your kids can also pay their own way by working while going to college.
Plan Your Way To A Happy Retirement Now
There are many parts to a well-rounded life in general, and there are just as many moving parts to a fulfilling retirement. These 9 tips are a great way to start preparing for the next phase of your life.
Disclaimer: Citywide Home Loans does not provide financial planning services, estate and retirement planning, or any other service apart from lending. You should always consult with your legal, tax and financial advisors to determine which strategy is the most suitable for your specific circumstances.