Five Steps Every Retiree Must Take Before They Hang Up Their Work Belt
Some people say they never want to retire, while others dream of the day they no longer have to hit the snooze button at 6 am. Whether you are someone begrudgingly walking towards retirement, or happily skipping towards an employment end date, you’ll need to get your finances in order. Making sure you have enough money to enjoy your retirement is essential both for your financial health and your emotional well-being, so start taking these steps before you put in your notice.
Take Advantage of Catch-Up Contributions
In the years leading up to your retirement, your goal should be to take advantage of catch-up contributions. Catch-up contributions allow you to save as much money as possible before you retire, which can ensure you have the life you’ve always dreamed of. In 2019, you can save up to $25,000 in a 401k account if you are over the age of 50. You can also bank up to $7,000 in your IRA account if you are over the age of 50. It is advisable to take full advantage of this option.
Diversify Your Portfolio
Look at your portfolio in the years leading up to your retirement. While it is advisable to have some safe investments, it’s a good idea to mix in stocks to help diversify. The pay-off can be significant. Stocks do carry a risk that you should be aware of, so before you make any big moves, sit down with an investment expert to figure out what your best course of action is for the life you want to lead after you punch your time card for the last time.
Speak with a Financial Advisor
Speaking to a financial advisor is always a good idea. While you have put in the work for years to make your retirement dreams come true, a financial advisor can help you figure out a way to ensure your finances are healthy for many years to come. Discuss what you’d like to get out of retirement and a financial advisor can figure out if it’s possible, and, perhaps more importantly, what lifestyle is attainable based on how you’ve been saving.
Clear Away Debt
Before your income diminishes and you start dipping into your retirement savings, clear away as much debt as you possibly can. This should include car payments, credit card payments, and personal loans. You should be credit card and personal loan debt free before you hang up your work belt for the last time. If you are currently swimming in credit card debt, sit down and budget your money to ensure you pay it off quickly. This will also increase your credit score significantly.
Consider Your Housing Options
If you are currently living in the house you raised your family in; you might be emotional about potentially parting ways with it. A large home in a good school district, however, is probably not something you need anymore. If you are interested in downsizing, look into the housing market to figure out what you can get for your money. If your home is paid off and you enjoy the area, you might want to stay put. Just consider all of your options before you retire, and your income is significantly lower than it currently is.
If you don’t know where to start on this process, start with speaking with a financial advisor. Not only will they be able to look at your current monetary situation, but they can point you in the right direction for any other financial questions you may have.
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