As you approach retirement, you need to worry about the upcoming changes. Why not you calm down by taking steps to take your new financial reality into your hands? In addition to working with a financial advisor to manage your financial affairs, you should actively engage with the tasks you can handle to ensure a smooth transition to retirement.
Here are three recommended activities that you should complete during the year leading up to your last day of work:
- Keep your expenses under control. Your retirement habits will go a long way in determining if you have enough to feel comfortable in the coming years, and your lifestyle after leaving the workforce should be in line with your retirement income. Get your calculator and list your planned expenses carefully. Identify recurring and predictable costs for utilities, housing, groceries and other necessities. Include leisure money and plan the unexpected.
Consider simulating you retirement years by following your planned retirement budget for several months and make the necessary adjustments as needed. It is usually most realistic to assume that your material and discretionary retirement expenses do not change drastically.
- Have a date with Social Security. Plan accordingly, if you want your social benefits to be used immediately. The Social Security Administration suggests that you apply for benefits three months before you start getting them. This includes your Medicare benefits that affect your healthcare costs. Research and meet with your financial adviser to understand how your retirement age affects the benefits you receive so that you can make an informed choice. Also, consider how your social security check can be influenced by other income, taxes, and a working or non-working spouse. Keep in mind that in most cases it makes sense to wait until you reach the age of 70 to gain benefits.
- Balance your investments. Evaluate your allocation of assets and reorganize your portfolio if you want to reduce risk and save capital. Depending on your goals and your comfort in the event of potential volatility, you should divest high-risk stocks and shift assets into safer, slow-growing investment vehicles. Liquidity can be more important in retirement, so consider moving your money into more liquid savings. Work closely with your financial professionals to determine your risk tolerance and discuss what is appropriate for your personal financial goals and situation.
- Get a 2019 advantage plan at www.medicareadvantage2019.org/
Once you pass the age limit, you can do three things in the first three months to get off to a good start.
- Start on the right path to stay on course. Start your retirement with the smart habit of carefully monitoring your expenses and income. With electronic banking, investing and billing, it’s easier than ever to keep an eye on your dollars. Most banks offer online banking with budgeting tools that allow you to see at a glance where your monthly expenses are. If, during the first few months of retirement, you find that your expenses are significantly higher or lower than you expected, visit your financial adviser again and see how you can adjust your monthly balance.
- Update your will and insurance. Now that your life circumstances have changed, check your will and insurance policies. Are your beneficiaries up to date on these contracts? Will your will be completed? You may find that the type and amounts of insurance you have are different than what you need now.