A Retirement Planning Checklist: Important Things To Do Before You Quit Your Job

Retirement planning is a process, not an event. When you’re getting ready to retire, it can be a bit daunting to think about everything that you need to do.

It can be a big challenge, from deciding how much money you’ll need and what your lifestyle will look like to determining how you’ll get by on less income every month.

But if you take one thing at a time, it’s not so hard. You can use several retirement planning strategies to prepare for the future. So if you’re close to retirement or planning to retire shortly, scroll down below for more information.

Make a retirement budget

As you get closer to retirement, you must ensure you can afford it. But, first, you need to ask yourself, how much money will you need? You can also use online calculators to find out.

But, if you don’t have one, start by tracking your income and expenses over the next few months. This budget includes all your retirement expenses, including medical bills, travel, and entertainment expenses.

You should also include any money you may need for emergencies or unexpected medical costs — this could include paying off student loans or saving up for a new car or house down payment if required, or both.

Once you know how much money comes in and goes out each month, create a final budget using software or hand with an Excel spreadsheet or pen and paper.

Boost your savings

If there’s one thing that retirement planning is all about, it’s saving money. So, if you haven’t already done so, the first thing to do is increase the amount of money you save each month.

Start by building an emergency fund that covers at least three months’ worth of expenses so that if anything goes wrong, you’ll have some cash on hand.

When it comes to your savings, put a name to it. A good rule of thumb is to save at least 10% of your income — and more if possible. The earlier in life you start saving and investing, the better off you’ll be later on down the road.

You can also start by contributing as much as possible to an employer-sponsored 401(k) or 403(b). If that’s not an option, open an IRA (Roth or traditional) and contribute to the annual limit each year until you max out the account.

The earlier you start saving for retirement — whether through a 401(k) or IRA — the better off you’ll be when retirement comes around later in life.

Even if you don’t have a lot of extra cash, making small contributions throughout the year will add up and help boost your savings account balance over time.

Reduce your debt

Debt is one of the biggest obstacles to retirement. It will keep you from building wealth and having a secure retirement.

It will be challenging to save for retirement if you’re still paying off student loans, car loans, or credit cards.

But, here’s the good news, you can use your 401(k) plan to pay down debt and reduce your interest payments. Here’s how:

In an IRA, you can make up to $6,000 of contributions with pre-tax dollars (or $7,000 if you’re 50 or older).

That means if you make a contribution of $2,500 in 2015, you’ll get a tax deduction and avoid paying tax on the money until it’s distributed from the account after age 59½.

If you’re in a 22% tax bracket and contribute $2,500 to an IRA, it would reduce your taxable income by $550 (22% × $2,500).

If you have any money left over after paying down your debt, consider making additional contributions or taking advantage of catch-up contributions to boost your higher savings.

Revamp your investment mix

Your retirement portfolio will likely consist of several different accounts, such as a 401(k), an IRA, and more.

It’s important to rebalance these accounts from time to time so that they do not overlap in one area or another — otherwise, you could end up with too much cash and not enough in stocks or the other way around.

So now is the time to revisit your finances if you haven’t reviewed your investment mix. Your portfolio may have changed due to market fluctuations or asset allocation changes you’ve made over the years. 

If your portfolio has changed significantly since you last looked at it, it’s time to review your holdings and make any necessary changes.

Sign up for Medicare and supplemental health insurance.

Even though Medicare coverage is accessible for people 65 years and older, it still pays for many medical costs, including doctor visits, prescription drugs, and hospital stays. 

And Medicare doesn’t cover everything — dental care isn’t included, for example.

Supplementing your Medicare coverage with private supplemental insurance can help fill in those gaps and protect against catastrophic medical bills that could wipe out your nest egg if left uncovered.

If you have an employer-sponsored health plan that includes prescription drug coverage, check with them about whether this will continue after retirement; if not, look into getting a Medigap policy from an insurance carrier.

Schedule a pre retirement checkup with your primary care doctor.

It’s essential to stay healthy as long as possible, especially before retiring so that you don’t need expensive medical treatment that could drain your savings account.

So, once you’ve decided to retire, it’s time for a thorough physical and mental health evaluation. Of course, you should have done this before making the decision — but better late than never.

During this appointment, ask about any new medications or medical tests that may be beneficial for your health in the future.

Also, ask about any conditions or medication side effects that could affect your ability to work full-time should they arise after retirement.

Research Social Security eligibility rules.

Social Security is a critical retirement income source but has some complicated rules. If you’ve been paying into the system for at least ten years and are eligible for benefits, you should receive them.

However, some people may be surprised that they’re not eligible for benefits because they didn’t pay into the system long enough or are only entitled to partial benefits.

If you’re between 62 and 66, you can apply for Social Security benefits as early as 62 — but if you file too early, you’re penalised.

When you reach full retirement age (or FRA), which is currently 66, your benefit amount increases 8% for each year you delay taking benefits after FRA.

So if your FRA is 66 and you delay taking benefits until age 70, the monthly payment rises 32%.

If you wait until after FRA to claim benefits, there are no penalties or reductions in benefits, regardless of how long they’re taken after FRA.

Also, the amount you get depends on how much you make and when you retire.

Create an estate plan and review existing wills and trusts.

When planning for retirement, it’s crucial to have a strategy before leaving your job. This is an essential step because you want to ensure that you will fulfil your wishes after your death.

Creating a will or trust can help ensure that your assets are distributed according to your wishes when you pass away.

You may have a lot of property you want to pass on to family members or friends. Still, if you haven’t named them in your will or trust, your family or friends won’t get it unless they’re designated beneficiaries on life insurance policies or other financial accounts.

You also should review any existing wills and trusts to make sure they reflect your current wishes.

If necessary, hire a financial planner to help coordinate preretirement activities and retirement planning.

A planner can help you determine how much money you’ll need in retirement and identify any potential obstacles along the way. 

For example, if you’re taking Social Security benefits early, this could reduce the amount of income available later on when you might need it most.

Final Thoughts

The more you do now, the better off you will be when you retire.

You can’t control the market and how much money your investments will make (or lose), but you can control how much money you put away.

If you’ve been putting off saving for retirement, start now. If you’ve been saving but haven’t made much progress toward your retirement goals, consider adjusting your strategy.

Keep in mind that these are merely suggestions and guidelines. Use them if they help you; ignore them if you think they’re useless.

The bottom line, do what makes sense for your retirement plan. But, by all means, don’t fall for scams or get-rich-quick schemes for retirement planning.

Do your homework, make informed decisions and develop a well-balanced savings plan for your needs. Then, find ways to cut costs and strategize, and don’t procrastinate: that’s the way to ensure a happy and fruitful retirement.

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