Since the beginning of your career, you’ve hopefully been saving for retirement — a landmark event years away. But now, it’s suddenly around the corner and no longer a distant milestone that will never come.
Instead, your retirement is almost here.
As the actual day gets closer, the final strides of your race have never been more critical. But perhaps surprisingly, this last stretch provides increased opportunities to prepare — both financially and personally.
So, what immediate action steps can you take today to prepare for retirement?
- Increase the retirement contribution percentage even in your last working years.
Take a moment to evaluate the current deferral amount from your paycheck. Could you afford to give more for the benefit of your future income and well-being?
For a practical look at how an increased contribution would affect your retirement income, create a scenario on our Retirement Contributions Effects on Your Paycheck Calculator to see the potential outcome on your current savings.
- Utilize catch-up contributions.
Any employee 50 years of age or older may contribute an amount above and beyond normal contribution limits to most employer-sponsored plans — BMHCC’s retirement plan included! For 2018, individuals could contribute an additional $6,000 once they meet the maximum contribution limits for the plan.
See the catch-up and maximum contribution limits for your specific plan and then take advantage as you’re able.
- Create a preliminary retirement budget.
Once the retirement celebrations are over, your monthly income will begin to look different — replaced by funds from your retirement savings, Social Security checks and potentially other sources.
But the question is, will that new amount be a surplus or a shortfall to what you’re receiving today? An important step to take before retirement begins is to track your monthly expenses while you are still working to see the amount you need each month to maintain your standard of living. Understanding the expenses of your current lifestyle will equip you with the right information to make informed decisions about your retirement withdrawal strategy.
Learn more about creating a sustainable retirement strategy and use our Retirement Budget Worksheet to project your potential finances in retirement.
- Talk with your family about finances and retirement.
While it may feel unnecessary or still far away, starting these conversations before your retirement date will help get everyone on the same page. In fact, your loved ones will be relieved that you broached the subject and they didn’t have to ask the hard questions.
You don’t have to share every detail with them during your first conversation, of course, but engage in a series of conversations with them during the next few years. Additionally, you should start a secure file that they know where to find in the event of an emergency that has important documents like:
- Trust or will documents
- Retirement account information
- Life insurance information
- Bank account information
- Durable power of attorney
- Anticipate challenges of a new season.
Many people are so excited to finally reach the retirement milestone, but when they finally do, disenchantment sets in and “Now what?” becomes their biggest concern.
As retirement approaches, slowly investing in other activities besides work may help you jump start your transition to life beyond your working years. For example, consider filling your time by:
- Starting a new class or hobby
- Seeing family more often
- Engaging in part-time work
- Setting up regular lunch dates with friends
With retirement quickly approaching, many choose to coast through their final working years, missing the opportunity to make strategic financial decisions and start conversations that would have made a noticeable difference during their retirement.
So, take charge of these last working years, remembering that retirement is almost here — which means it’s still not here yet.