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Planning for retirement may be a hard job. However, it can turn into some joyful years later in life.

Planning for your retirement is not only a big job but a really important and serious job that can be used to create a pleasant and even youthful retirement that has a good chance of being a lot of fun, according to Kiplinger in “A Pre-Retirement Checklist: 8 Steps to Take Right Now“.

Most large tasks or projects are more likely to be completed if broken down into a series of steps. Here are eight steps that can make planning for your retirement more successful:

  • Where do you want to live? Think about the lifestyle you want and find a location that will support it. If travel is your focus, a “lock and leave” condo means you don’t have to think about your home while you are out exploring. If you are a homebody and like a peaceful setting, a small town may work well for you. If you have more money, you will have more options but need to know your priorities.
  • Start practicing being retired now. What happens if you don’t have a job to go to every day? Take a week of vacation time to do nothing. How do you feel by the end of the week? Bored? Anxious? Ready to go back to work? Post-retirement depression occurs to people who have a hard time adjusting to the loss of their role in the workplace. Start thinking about who you want to be when your identity is not tied to your job.
  • Eliminate as much debt as you can. With no mortgage, car payment or credit card debt, you have more control over your expenses. This takes planning. Start by listing all your current debts, then rank them not by amount, but by interest rates from highest to lowest. Start paying down the highest interest rates and work your way down, until you are debt free.
  • Shift your risk profile. Once you get within five years of retirement, it’s time to adopt a more defensive investment philosophy. Maybe you were an aggressive investor in your early or middle earning years but now is the time to reduce risk. Rebalance your portfolio quarterly to get there slowly, reduce exposure to equities and create stop-loss strategies to mitigate downside risk.
  • Deal with it: health care costs. This is the ugly part of retirement that we tend to hope not to have to deal with at all. As you age, your health care costs are likely to go up. Do your research and plan for what Medicare does not cover, like long-term care or health care costs that happen when you are overseas.
  • Make a budget and live on it. You should actually make two budgets: necessities and discretionary items. What do you need to live now, including housing, transportation, food and health care? What are the things you’d like to enjoy: recreational activities, travel and entertainment? Create a plan that gives you the best possible chance of getting your necessities covered, then play around with the luxuries. If there’s no breathing room, then consider upping your savings or working longer.
  • Apply for Social Security early. Apply three months in advance of the date you would like to start getting retirement benefits. You are allowed to apply four months in advance of your Full Retirement Age. Get up to speed with all the data on Social Security: when should you start taking benefits, should your spouse start taking benefits before you, how will your income impact your benefits, etc.
  • Could rolling over your 401(k) work for you? There are several moves that can be made with your 401(k), including rolling into an IRA, which could increase investment options, give you more flexibility and offer more distribution options.

Reference: Kiplinger (Oct. 9, 2018) “A Pre-Retirement Checklist: 8 Steps to Take Right Now

For more information on elder law, asset preservation and estate planning, please visit my estate planning website.

Mr. Amoruso concentrates his practice on Elder Law, Comprehensive Estate Planning, Asset Preservation, Estate Administration and Guardianship.