Some Steps to Prepare for Retirement – 2020 Guide

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As you get closer to your retirement, you need to start taking steps to ensure your “Golden Years” are everything you hoped for. It would be nice if things fell into place automatically, but that’s not how it works. To achieve your goals, consider these 11 steps.

  1. Define What Your Retirement Looks Like

When it comes to retirement, everyone wants something different. So, start by identifying what it is you want yours to look like. Regardless of your goal, whether traveling the world, spending time with family, or starting a new hobby, put your vision down on paper and be specific.

Do your best to limit your goals to just five things. That doesn’t mean you can’t do more, but this will help you set your priorities. As part of this exercise, eliminate anything unnecessary and include things you can attain. Also, be sure you can meet your financial responsibilities. With a detailed list, you’ll have an easier time staying focused as you move closer to retirement.

You can also help define what your retirement might look like by using do-it-yourself retirement planning software such as WealthTrace or Betterment. Both have great tools to help you plan for your retirement and figure out when you can retire safely without running out of money.

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  1. Assess Your Current Healthcare

When you retire, you want to be as healthy as possible so you can enjoy this phase of your life to the fullest. Although it’s important to address known concerns, it’s just as important to take preventative measures. That includes having an annual physical done, getting your eyes and hearing checked, following a healthy diet, exercising daily, and getting adequate sleep. These things combined will help you maintain good mental and physical health.

  1. Know Your Assets

Sure, you know how much your paychecks are and the amount of money you have in the bank. But beyond that, you should have a full understanding of unconventional assets like restored automobiles, antiques, a coin or stamp collection, valuable jewelry, artwork, and so on.

You might also have a special skill, such as playing an instrument or doing home improvement projects. When planning for your retirement, you want to determine how you can use non-traditional assets to make money.

  1. Networking

Even as people age, it’s essential to maintain good friendships and connections. Social media makes that easy. Take time now before you retire to find or develop a network. Not only does this give you the opportunity to showcase your money-making skills, but it also keeps you busy and motivated. People who stay active during retirement are much happier and more content.

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  1. Collecting Social Security

Although you can retire at the age of 62, experts suggest you hold off as long as you can. The reason is that the older you are when retiring, the more money that you’ll receive in Social Security benefits. So, if you want a comfortable financial cushion, wait longer to retire.

Consider this. Someone waited to collect full Social Security benefits until they reached full retirement age or older. When that individual died, their spouse claimed 100 percent of the benefits. In comparison, if a person claimed their benefits earlier and then passed away, their widow or widower would get far less money. Based on the age they started to collect Social Security, they’d receive anywhere between 77 and 99 percent rather than 100.

  1. Work Wants and Needs

Unless you’re among the fortunate few who are financially secure for life, you’ll need to bring in some money after you retire beyond what Social Security provides. So, you want to figure out your needs and wants. Don’t feel nervous about writing down all of your dream goals. You can always scale back if necessary. This goes hand-in-hand with the list you make for how you want to spend your retirement years.

  1. Set a Budget

Once you’ve created a list of your wants and needs, you can then start working on a retirement budget. For this, you’ll need to include the amount of money you bring in versus your debt and what it’ll cost you to achieve your goals. Experts recommend that you start by tracking income and debt for three to five months. That’ll help you see a pattern and get an average. Be realistic with your budget.

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  1. Diversify Your Money

Before entering retirement, you’ll want to diversify your money into several different investments. Most importantly, choose things that aren’t overly expensive and those you understand. There are many great funds out there that help you diversify at low cost, especially Vanguard.

  1. Reduce Expenses

This is also the time to determine what expenses you can either eliminate or reduce. Although you’re never too old to save, the younger you start putting money aside, the better retirement you’ll have.

Whether you start early or late, take stock of your expenses. Then, determine which ones you can pay off or reduce. Here are two examples. First, lower the number of cable channels you get. Second, if you have weekly pedicures done, go just twice a month. Little things combined can make a significant difference.

  1. Stay Prepared

The last thing you want to happen when you retire is to get hit with some kind of expense you didn’t anticipate. This is why socking money away and investing are vital. If you had the roof on your house damaged due to a storm, but your homeowner’s insurance doesn’t cover Acts of God, you’d find yourself in a financial situation. Before you retire, you want to have this figured out because you never know when the unexpected will occur.

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  1. Stick to Your Plan

Okay, so you might need to tweak your plan slightly, but, for the most part, once it’s set, leave it alone. If you start working on this before retiring, everything should align perfectly. Of course, if you face something challenging, you can always work with a professional financial planner. That individual will get you back on track so that ultimately, you have an amazing retirement.

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