10 Things You Should Do to Prepare for Retirement
Whether you’re like most Americans and planning to retire at the average age of 63, or you’re hoping for an earlier retirement, there are many steps to take in order to retire comfortably. Learn how to live comfortably in your golden years with the help of professional retirement planners. At Firma Financial Planning, we’ve identified 10 steps to take before embarking on your retirement adventure.
Determine Your Current Assets
It’s impossible to create a road map for your retirement without understanding your complete current financial situation. Retirement advisors need to know what you’re currently dealing with in order to determine the steps you need to take to reach your retirement goals. Some retirees need to save at least $1 million, but that figure will vary dramatically based on your current lifestyle. Remember to not only plan your annual spending, but also any unexpected expenses that may occur during your retirement.
Establish an Emergency Fund
Emergencies happen. From flooded homes and roof replacements to sicknesses and new vehicles, it’s essential to save up enough for these sudden expenses and large purchases. As a general figure, try to plan between three months and one year of your living expenses. Keep it in a safe and secure savings account where you won’t spend it on day-to-day expenses.
Identify Your Retirement Needs
Now that you understand where you are and have an emergency plan in place, find out where you want to be. What will your retirement needs be? How much can you comfortably live on? No one knows the length of their retirement, but try to estimate how long you’ll have in order to plan your finances.
Pay Off All Debts
Retiring with debt puts you in a struggling financial situation. Aggressively pay off all your debts to help protect your retirement from this financial burden. Start with high-interest loans and debt, such as credit card balances, and finish off with low-interest debts, like your mortgage.
Make an Estate Plan
While you’re planning, it’s important to also consider what will happen to your finances after your retirement. Pondering the end of your life can be a stressful time, but it can help your loved ones handle your estate more easily as they grieve. Ask your financial planners for retirement estate planning assistance.
Choose a Health Insurance Strategy
Will your health insurance continue after you leave your work? As you age, your medical expenses may grow exponentially. Make sure you have sufficient coverage to cover any medical issues that may arise.
Consider Investment Options
Now that you’re not working, or working less, let your money work for you. Ask your financial advisors about your investment portfolio and how it will be handled when you retire. The right real estate, mutual funds and bonds can supplement your income and help you retire more comfortably.
Learn About Fund Withdrawals
Of course, investments may not help you in retirement if you’re unable to withdraw those funds. Be sure you understand how withdrawing funds from your investments works, including any penalties that may apply.
Dream About Your Retirement Goals
What will you do with your time? If you reach all your financial goals, dream about how you’ll spend your time and money in your golden years.
Choose the Right Financial Advisor
In order to balance all these areas and hit each milepost as you plan ahead for retirement, consider contacting us today. At Firma Financial Planning, our professional advisors can help you reach your financial retirement goals. Call us at 586.800.4682 to assess your current retirement plan and find ways to reach your goal of retiring in comfort.