For obvious reasons, so many of us tend to start working at a very young age up until the age of retirement. It is quite unfortunate that during these working days of our lives, we dedicate our lives just to work and forget to plan for the times we may stop working
When we stop working, it means that retirement is set in. And at this time we finally believe that we’ve got the time to do the things we have and ever wanted.
Retirement is seen as that period we just want to sit back and enjoy our life off work. However, retirement can only be enjoyable if only you are able to put things together before you hit that stage of life.
There are things we need to do before retiring. These things will go a long way to determine if we are going to have a fun-filled retirement or not.
This article has put together some things you need to put together before retiring. These things will serve as a tool or guidelines to help you know how you should be preparing for your retirement.
Here are 16 important things to do before retiring:
1. Establish your retirement needs:
You can’t be saving for what you don’t know. There are lots of expenses to be made when you find choose to retire. Some of these expenses I’ve discussed in my previous article.
Retirement is not just a luxury, it is way too expensive. In fact, you need lots of your pre-retirement income in order to live that retirement dream. Having an idea of what you need for retirement gives you a direction of where you are going.
What are the things you should be expecting in such a budget? If there are, then how much? So I need a house, a car? Food, groceries, and entertainment all require an adequate budget which involves money.
2. Determine how much you need in retirement:
Of course, this will be proper, when you have already listed out most of the expenses you are expecting for your retirement, it is advisable you approximate the said amount so you don’t get surprised when things change during the retirement period.
According to Steinke, he explained that “if you are still working and your salary is $100,000 per annum, you will have to estimate that which you will need to $70,000 to $80,000 a year as a retirement starting point”.
Be able to come up with the amount you will need which is your income before retirement, you can estimate it or be from 70% to 80%.
3. Consider your Investment Needs:
It is not rocket science that you need a regular inflow of cash during retirement, and one of the historically proven ways to get retirement incomes is through investments that pay regular dividends.
You could invest in real estate and dividend stocks. When you start your investment early, you will be surprised to see how much you would make before retirement and may not have to worry about how to finance your retirement life.
Checkout: 16 Ways to Invest with Little Money
Importantly, know where to invest, don’t be a reckless investor, it is advisable that you visit a certified investment adviser on this if possible.
4. Say no to debts:
You should not be thinking of retirement when you are stuck with a heavy debt burden. Do you really want to be paying for debts even when you retire?
Debt can cause a serious strain during your retirement. You don’t want any kind of debt interrupting your rest.
Consider it this way, when you retire you might be spending on your fixed income which is meant for your retirement. So, before you retire, clear all debts and stop getting into more debts.
5. Have a Clear Retirement Plan:
Most people who enjoy a successful retirement life do so with a good retirement plan. You shouldn’t be thinking of retirement without a plan.
A retirement plan is how you maintain your lifestyle even after you stop working. Unfortunately, most people make plans for almost everything in their life but a retirement plan.
The amount of wealth you’re able to build up in your retirement account over your working years will determine the kind of life you can afford during your golden years.
Checkout: 14 Steps to Plan for your Retirement
Create a list of what you want and want to do during retirement, which helps you with a clear sense of how much expenses you should be expecting and how to go about saving up for each item or need.
And for this to be achievable, you have to create a dedicated retirement saving account for it. Just like your household expenses and as such should be different.
7. Have a retirement vision:
Most people know the time they want to retire but some people don’t. You need to keep in mind the age you are thinking of taking that long vacation off work.
Have a clear vision of when you want to retire, with that in mind you have a clear objective of what to expect.
8. Retirement taxes:
Yes! There are taxes to pay during retirement hence the need to plan for it. Is not just about the income tax this time, there are health care rates, social security tax, property tax, and the likes of them.
You have to learn about the taxes retirees are meant to pay during retirement. Considering your earning days where the money is deposited into a different account and some taxes are charged.
Retirement taxes are a little bit complicated. You have to know what is involved, and this would largely be affected by where you want to retire, and the kind of investments you are making amongst others.
9. Track your investment:
Inasmuch as people invest in order to have some income aside from their paying job, which is important, but knowing or understanding how this investment works for you is very important too.
Keeping an eye on how your investment is working for you in different markets and sectors helps you know the level of risk in the market and also your returns.
You should be able to give an account of how your investments are allocated, perhaps by your financial planner, and track your progress. This is the right step towards ensuring you have a great retirement.
10. Cost of Health care:
You have to understand how these things work including the medicare which can very messy sometimes. Once you retire, you may need the services of medicare to keep your health in check.
The cost of health care is on the increase because of medicare and as such, it is better to plan for such a rise, to avoid the unnecessary headaches.
11. Account for a Change of lifestyle:
Retirement comes with a different kind of lifestyle and it wouldn’t be bad if you start to plan for those changes, you may likely to experience during retirement.
You may have your own plans for retirement but you have to be mentally prepared for a shift in lifestyle when retired.
You’ve got to find a way to make retirement enjoyable for you by creating different activities. Look for means to get busy.
12. Assess your Liabilities and Assets:
People should know how much they are worth when preparing for retirement. Make a list of these assets be it cash, real estate, stocks, or your properties in general.
When you track these records, which is your capital, it keeps you updated knowing how you should play your retirement.
Do the same for your liabilities like your auto, loans personal loans, mortgages, and the rest.
13. Create Emergency Fund:
With a retirement account set aside, it is also paramount to have a healthy emergency account that way you won’t be pushed to make use of your retirement savings.
Your personal savings account should include your household expenses or any other outstanding debts. Whatever you do, ensure you are not spending from your retirement savings.
14. Go for Insurance Policies:
Some people are lucky enough to have their employers cover this aspect for them especially life insurance as a part of their benefits.
Sadly, once retirement hits you, this benefit goes away hence you need to come up with your own life retirement policies help you to make your beneficiaries pay most of the major expenses for instance a mortgage.
However, you should plan to renew the important insurance policies you may need during retirement so you have a more relaxed retirement.
Sometimes, people prefer their retirement outside their home by traveling to a new city or retirement community. Whichever you choose, you need to plan for it.
Also, consider the factors involved, is your old house convenient for you to move around as you grow old? Do you want to live around relatives or live around new people? There are so many things to consider.
Some people live would prefer to live in an assisted living community (which comes with its own expenses). You generally have to plan your housing.
16. Involve your partner:
For married couples, it is advisable you plan your retirement with your partner to know their preferences too. Share collectives ideas by seeking their own opinions too.
What do they want? How do they want your retirement to be? When you are on the same track with your spouse, it helps you strategize well and know how you can spend your retirement together.