Smiling woman outdoors on beach contemplating retirement Close to Retirement? Here’s What You Should Know. Smiling woman outdoors on beach contemplating retirement
Careers + Retirement

September 24, 2021 | Careers + Retirement

Close to Retirement? Here’s What You Should Know.

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Close to Retirement? Here's What You Should Know.

Quorum

Sep 24 2021, 03:31pm


https://learn.quorumfcu.org/app/uploads/2020/10/Close-to-Retirement-Learning-Hub-Large-Template.jpgClose to Retirement? Here's What You Should Know.

The closer you get to retirement, the more excited you may be—and more worried. If you are 18 to 24 months away from retirement, this article is for you. You may still be wondering if you have enough saved, or if you can (or should) plan on finding a supplemental income. How will an uncertain economy affect your retirement?

Making Sure You Are Financially Ready To Retire

If you are close to retirement, you should have an idea about how much money you will be retiring with, as well as other financial information. However, you may still be concerned that you haven’t saved enough. Below is a checklist to make sure you are prepared for retirement.

Know How Much You Have. If you are close to retirement, you should have a clear picture of how much you will have saved by retirement, as well as any sources of income. You can use tools online that can calculate for you how much you should have saved for retirement to make sure you are on track.

Start Downsizing Now. Many people decide to downsize and simplify their lives when they retire. However, you don’t have to wait until retirement to start the process. Think about what your life will look like in retirement. Are you going to move to a smaller residence or even to another state to save expenses? Do you want to travel? These are all considerations to think about as retirement approaches. If you know you are going to be downsizing, you can start early by selling or donating items and furniture or giving them to family members. Physically preparing your space will make retirement more of a reality for you.

Understand Your Health Needs. One of your biggest expenses, when you retire, will likely be healthcare. Before that date comes, you will want to start thinking about what your post-retirement healthcare plan and expected costs will be once you enter retirement. You should also take steps now to ensure you are in optimal health for retirement by checking with your doctor. Now is the time to make lifestyle changes to put you in the strongest physical condition to enjoy retirement.

Plan Your Budget. It is never too soon to start preparing a retirement budget. If you know what your fixed monthly income will be, you can start to calculate monthly expenses to see where you need to cut or where you have extra room for additional spending. If you are going to need to start cutting expenses in retirement, by starting before retirement, you will already be in an optimal position for retirement. You may also be able to increase your savings for retirement by cutting expenses early.

Will You Need Supplemental Income?

Some retirees choose to maintain a part-time job or other side income in retirement to keep themselves busy. Some also choose to pursue supplemental income in retirement for extra discretionary money or to save for larger purchases or travel. However, some people will need to supplement their retirement funds in order to live comfortably. By talking to a financial advisor at your workplace, financial institution, or retirement investment company, you should be able to figure out if you will need (or would benefit from) supplemental income during retirement. Make sure to check if you have any income limits that might affect retirement or pension payouts.

How To Navigate Retirement In An Uncertain Economy

Some people faced with retiring sometimes question whether the economy is stable enough for them to retire. If you have concerns that now may not be a good time to retire, there are things you can do to help protect your savings. First, check with your employer or human resources department to see if there are any financial benefits for postponing retirement. There may also be benefits to retiring early. Some employers offer early retirement packages as incentives. Second, evaluate your investment accounts for risk. Speak with a financial or investment advisor to make sure your investments are in stable, low-risk investments. Then take any steps necessary to put your investments where you will have the safest return. Finally, ask around to other coworkers, peers, or anyone recently retired to find out what financial steps they are taking for retirement. By having as much information as possible, you will feel more secure in your decision to retire.

Last-Minute Tips For Boosting Your Savings

If you are still unsure if you will have enough money in retirement, or just want to use your final time before retirement to accelerate your savings, below are a few ways to add extra funds to your retirement savings:

  1. Cut expenses;
  2. Sell items as you downsize, including unnecessary vehicles, furniture, or other household items;
  3. Find a part-time income or start your side gig now;
  4. Max out your contributions to any IRA, ROTH, or 401k accounts;
  5. Take advantage of all employee matching of contributions; and;
  6. Protect your savings by moving to more conservative investments.

Any extra money you earn or save can immediately go into a retirement or traditional savings account. It’s never too late to supercharge your retirement savings. By focusing on retirement in the 18 to 24 months leading up to it, you can make big gains in your financial planning.

Source: Balance Financial Fitness

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