Learn and Plan | Preparing for retirement checklist
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Preparing for retirement checklist

Jun 4, 2024, 1:22:17 PM | Reading Time: 5 minutes

If retirement is no longer a faraway dream but a soon-to-be reality, congratulations! This can be a very exciting transition, but oftentimes an emotional one, too. Ensuring a comfortable and financially secure retirement takes a little prep work, but when you take time to check all the boxes, you can feel more confident about achieving your goals for the future. Here’s a checklist for getting ready for retirement and how to shift to the next stage more successfully.

Choosing when to retireChoosing when to retire

Officially retiring can feel like a giant leap, so how do we know when the time is right? Many factors can influence this decision, such as having family members who are still dependent on a worker’s income, wanting to pay down debt, or having a spouse who is considering retiring at the same time as their partner.

Deciding when to retire can also be impacted by Social Security eligibility, at what age you can begin claiming benefits, and when you can begin taking withdrawals from any retirement accounts. Once you reach a certain age, retirees are required to take required minimum distributions (RMDs) from certain qualified retirement savings accounts like 401(k)s and traditional individual retirement accounts (IRAs).

How to know if you're ready for retirementHow to know if you’re ready for retirement

People are often mentally ready for retirement but may not be financially prepared for the next chapter. Part of zeroing in on a retirement date often includes evaluating outstanding debt, retirement accounts, personal savings, and investments to see if there is enough income for the years ahead. To help determine financial readiness, it’s good to calculate expected expenses, including healthcare costs, and compare that number to retirement savings and projected income. To retire confidently, it can also be helpful to consider:

Retirement goals and aspirations

Consider things such as traveling, pursuing hobbies, or spending time with family. Ensure a financial plan aligns with these retirement goals.

Physical health and overall well-being

Determine if physically and mentally prepared for retirement, including healthcare needs, insurance coverage, and access to quality healthcare services.

Social and emotional readiness

Think through social connections, relationships, and support systems. Consider how you’ll stay active and fulfilled in retirement.

Making a retirement planning checklistMaking a retirement planning checklist

Once a retirement date has been determined, it’s time to get things organized and set up for success. Here are some steps that can help you get started:

Review financial goals

See if they need to be updated to reflect what you have in mind for the future. Changes in health, career, family, and the market can all potentially affect financial goals and a retirement plan. Retirement may also introduce new goals like travel, relocation, or funding a grandchild’s education.

Evaluate housing situation

Determine if you want to age in place, downsize your home, or relocate to be closer to family. It may make more financial sense to move to a smaller home to reduce the costs of living, or perhaps the mortgage is paid off, and staying put is a better choice.

Evaluate retirement savings and investments

Estimate how much income will be available once retirement begins. This can include employer-sponsored retirement plans, annuities, pensions, investments, and other savings.

Estimate retirement expenses

Including planned expenses like utilities, food, and transportation, as well as unexpected costs like rising health care or long-term care. Will certain expenses be eliminated in retirement? Will new ones be introduced?

Create a retirement budget

Once income and expenses are estimated to determine ways to cut back spending, identify any gaps, and determine if certain spending categories will be added or eliminated once retired. A budget is essential to sustaining a retirement lifestyle and making sure financial goals remain on track.

Update estate planning documents

Such as wills, power of attorney, and healthcare directives, to reflect current wishes. Ensure beneficiaries' retirement accounts, life insurance, and other accounts are up to date.

Talk to a financial professional

Receive guidance before and during this next stage of life. Together, you can ensure there is enough retirement income to sustain your desired lifestyle and potentially discuss supplemental retirement income streams like an annuity.

Prepare emotionally for retirement

Reflect on personal values and goals and think about what you want to achieve and experience during retirement. Retiring can sometimes be letting go of a previous identity that was tied to a career or earlier life stage, so it can be helpful to explore what interests and activities sound appealing for the future. Perhaps that includes volunteering, learning new skills, or getting more involved in the community.

It's important each person tailors their checklist to match their individual needs and goals. Since retirement often involves significant transitions, such as changes in daily routines, relationships, and roles, anticipating these changes and adequately planning for them can help make the adjustment easier. Knowing you’re financially prepared for retirement and have the income needed to achieve your desired lifestyle can help lessen the worries about the future and allow you to enjoy your life’s work finally coming to fruition.