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Retirement Checklist: 10 Things to Do Before Retirement


Retirement often feels like crossing the finish line of a lengthy marathon in many ways. It's the goal that we've all been striving for throughout our careers. Even if you've been saving and planning for decades, there are still things you'll need to think about emotionally and financially as you approach your formal retirement date. So, don't just sit back and relax until that date approaches, be proactive and take care of these ten things so that you can have a comfortable retirement that you'll love!


1. Pay Off Debt

If you're on a fixed income, debt may be devastating. Minimum payments on credit cards, vehicle loans, student loans, and mortgages all eat up the initial cash you receive each month. After retirement, your income is likely to decrease, maybe significantly. Eliminating debt payments will remove any unneeded expenses from your budget, allowing you to get the most out of a limited budget.


2. Create A Realistic Budget Based on Your New Income

Before you retire, make sure you have a retirement budget in place to ensure you don't burn all of your limited income. One great way to get started is to create a spreadsheet with all of your projected retirement living expenses, from food to housing to healthcare and taxes. Determine which of these costs are constant (i.e., occur at the same amount every month) and which are variable (i.e., occur every month or randomly with different amounts). Don't forget to include expenses for any hobbies or trips you may be considering during your retirement. Creating a budget will help project what will be happening with your money during retirement, and it will help you avoid serious financial issues.


3. Plan Your Retirement Withdrawals

Once you have your income and budget determined, you'll need to figure out how to withdraw funds from your retirement accounts. Each retirement account has its own set of rules and regulations. Such rules include things like the age you must withdraw and taxes associated with withdrawals. To begin this process, first look at all the resources you have to fund retirement. Social Security, Pensions, 401(k) Plans, Individual Retirement Accounts (IRAs), and Annuities are examples of such resources. After you've assessed your resources, you'll want to compare them to the needs outlined in your retirement budget as well as your unique circumstances.


4. Plan for Changes in Your Medical Insurance

Before you leave your employer's health insurance, make sure you sign up for a new health insurance plan. Once you turn 65, you'll be eligible for Medicare, but it won't cover everything. For example, services like dental, long-term care, or vision screenings are not covered under Medicare. If your retirement future includes travel abroad, keep in mind Medicare does not pay for services outside of the country. You also have to pay for Medicare. The amount you must pay is determined by several factors, including your income, whether you are subject to late-enrollment fees, and whether and to what extent you choose additional coverage. Of course, if you're retiring under 65, you'll have to get your own coverage, so this is something to be mindful of. Other coverage options to consider before you retire include disability, life, and long-term care insurance. Remember, these policies tend to get more expensive as you age, so shop early.


5. Understand Your Social Security Benefits

Collecting Social Security is an essential element of a well-thought-out retirement strategy. For the vast majority of the United States, Social Security will account for a significant portion of retirees' monthly income. You can start collecting benefits when you reach 62, but you can choose to wait until you reach 70. So, why does the age you collect matter? Well, according to a study in 2019 by United Income, almost 96 % of Americans claim their Social Security benefits at an inopportune time, resulting in a $3.4 trillion shortfall. That's $111,000 in missed retirement income per household due to collecting at the incorrect time.



6. Understand Your Portfolio

Understanding why your investments are distributed in the manner they are is critical to a retirement plan's success. You must understand how your assets are allocated and how they perform for you over various market cycles. This helps you to determine your degree of risk and protection. You must understand the rationale behind your investments and how those allocations relate to your retirement objectives. If you don't, you could be placing yourself in the way of unwanted risk during your retirement.


7. Review Your Estate Plan

Along with making sure your finances are in order before retiring, you should review your estate plan as well. An Estate Plan outlines how your assets and obligations will be distributed in the event of your incapacitation or death. Having a good estate plan ensures that your assets are distributed to the right people and provides your beneficiaries with some peace of mind. Having everything in order will allow your loved ones time to grieve and deal with their loss instead of getting bogged down in legal technicalities.

Here is a list of items every estate plan should include:

  • Will/Trust

  • Living Will

  • Health Care Directives

  • Medical Power of Attorney(s)

  • Financial Power of Attorney(s)

  • Beneficiary Designations


8. Consider Your Current Living Situation

Don't forget about housing when planning for retirement. There are many things to consider when determining if your present house will be adequate for your elderly years. Have you paid off your mortgage? Will you be able to navigate your home with ease as you become older? Do you wish to relocate to a different city? Do you want to be closer to your family and friends? Will you ever require assisted living? Remember that lenders are more willing to lend to borrowers who have income, and it will be easier for you to pay for housing changes while employed. So, if you're thinking of downsizing or relocating, you might want to do it before you retire.


9. Prepare For Lifestyle Changes

Retiring is one of those significant events in your life, just like having a child or getting married. Many things will begin to change, not only financially, so prepare yourself ahead of time. You'll face decisions about how to spend your time, how to stay in shape, how to stay connected with friends, and much more. So, don't forget to plan for the non-financial decisions that come with retirement as well.


10. Schedule A Consultation with an Experienced Financial Advisor

One last and crucial step in this list, it to hire a financial advisor. Hiring a financial adviser is a fantastic way to make sensible financial decisions before you retire. Advisors can assist you in choosing the proper retirement account, providing investment advice, and assist you in developing a reasonable budget. It is best to speak with a financial advisor as soon as possible, but it is never too late to get started in planning your financial goals.


Here at Fourth Avenue Financial, our first priority is your overall financial success. We want to help you develop, implement, and monitor a strategy that's designed to address your individual situation. If you are ready to start planning for your financial future, we are here to help. Contact us today at (304) 746 7977 to schedule a meeting with one of our experienced financial advisors or schedule online: https://calendly.com/fourthavenuefinancial/introductory-zoom.


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