Like anything else in life, there is never such a thing as being too prepared for retirement. This is especially true if you’re planning on retiring in the next 5 years. While you’ve most likely already done a lot of preparing for your retirement, there are a few things you definitely need to take care of in the last 5 years.
- Stock Up On Cash Reserves – Getting all your applications and paperwork in order for social security and pensions takes a lot of time. The same goes for setting up withdrawals from 401Ks and IRAs. In fact, these often get delayed. That’s why it’s a good idea to plan for such delays by having extra cash reserves on hand or in safe investments you can easily access quickly.
- Estimate Your Needed Money – Come up with a basic estimate of how much money you will need for your retirement. That way, you’ll know as you get closure if you’ve saved enough. Think about costs like home improvement, hobbies, vehicle repairs and other potentially unforeseen items when doing your calculations. If you need a little more help coming up with how much you need for your retirement, a financial advisor can help. Find one near you.
- Think About Taxes – Taxes can make or break your retirement savings. Be sure to take them into account when planning. Think about questions like: will I be in a lower tax bracket? Will I move? Do I need to diversity company stock? All of these answers will affect your retirement taxes. You can learn more about your potential retirement taxes
- Diversify – While having your investments go up and down isn’t scary while you’re working, it’s a big deal after you’re retired. As you make regular withdrawals from an account, the account’s volatility can have a massive impact. Start reducing the risks of losing your retirement money now by diversifying your investments. A range of investments will increase the odds that your money will be safe. Unsure how to diversify your investments? Talk to your financial advisor or do some research.
- Have a Plan B – The last few years of your career are vital to your retirement. This is super scary as unemployed Americans between the ages of 55 and 64 usually stay unemployed for around 11 months. Make sure your retirement stays on track, even if your job doesn’t, by having a job plan b. From freelancing to a new business, it can’t hurt to have a backup plan.
- Downsize Your Home – On average, housing accounts for the biggest part retirement spending. So, if you change out a $250,00 house for a $150,000 house, not only will you have extra cash in your pocket, but also you can free up around $3,250 a year in upkeep and taxes. Get more information about housing costs and retirement by reading articles like this.
Be as prepared as possible for your retirement by doing these things in your last 5 years of working.
Do you have any more pre-retirement tips? Do you have any questions about your last 5 years before retirement? Comment below! Be sure to check out some of our other articles for more retirement tips.