Autor: Maria Alfano-Huggins
You lived a full life and have had plenty of working years under your belt. Now you’re ready to call it a day! Consider these top 10 things to do before retiring.
Retirement is a big change that requires much planning. It’s not something you can take for granted nor can it be put off till you have time to think about it.
Top 10 Things To Do Before Retiring To Live a Full Life
Before you know it you will be at the point where you will have not taken care of what you need to retire comfortably. Have you stopped to consider what you need to do before you retire?
What You Should Do Before RetirIng
Here is a list of the top 10 things to consider before you stop working. What you do before you retire will make your retirement a joy!
1 – Where – Determine where you want to spend your golden years. Will you be staying in your current home? Or, will you move away from the land of cold and snow to somewhere warm and cozy all year ’round?
Depending on your choice, your budget will be impacted. Some would even tell you to figure out your budget first before deciding where to live. This is a bit of a backward and time-consuming approach. Know your financials before you dream of living in Monaco and become very disappointed when you realize you can’t afford it.
2 – Understand The Money – Creating a budget gives many people heartburn. But, you need to know your numbers before you can do any planning for retirement.
Ensure to think about your current expenses vs your future income potential.
Many folks make the mistake of thinking their monthly income will be similar after retirement to prior to it. Shock and dismay quickly settle in.
3 – Government Pensions – Do you qualify to receive social security or your country’s equivalent? If so, how much will you be receiving each month?
Check out the social security retirement calculator for American citizens. For our Canadian friends check out the CPP estimator.
Two key factors to consider are:
a. How much will you get? This is often dependent on how much you contributed during your working life and when you decide to start withdrawing from the plan.
b. What age will you start withdrawing? In some cases, it makes sense to start withdrawing as soon as you can. There may not be a lot of value in waiting and the amounts of the monthly payment may not change significantly. Let’s say, for example, the payment at age 62 is $700 per month and at age 65 it would be $730 per month, then why wait to start drawing from your government pension?
4 – Company Pensions – Get a good understanding of your company pension. Knowing when you can start withdrawing is half the battle. Knowing how much you will receive is the other half.
Your employer should be providing an annual statement of the value of your fund. If they don’t, then talk to the plan administrator. Someone at the organization will be able to answer all your questions including:
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At what age can you start taking from the monthly pension
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How much will your monthly payment be
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On which date can you expect to have the deposit made to your bank account
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Can you withdraw early
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Are there any penalties for withdrawing early
5 – Tax Planning – There is a sad misconception that when one retires, one will pay fewer taxes than when they were employed. While this may be so for some people, it’s not true for everyone.
Consult your tax expert to determine what your personal tax situation will be like before you quit. This is why is it crucial to have your budget ready prior to leaving the j.o.b. It is on the top 10 things to do before retiring list so don’t forget to think about this.
6 – Bye-bye Debt – Finances will be scarce enough without the added pressure of a boatload of debt. Do what you can to eliminate all the credit card balances, loans, car notes, etc before you retire.
Clearing your debt will leave your monthly income for use on important things like:
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Shelter
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Food
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Clothing
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Utilities, phone, internet
And, maybe you will have a some left over to have a little fun 🙂
7 – Manage Investments – Do you have a vacation home, rental properties, stocks, or other assets in your portfolio? Now is the time to determine what you will do with them. Will you:
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Cash them out because this was always meant to be your retirement nest egg.
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Pass them in your will to a close family member or friend.
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Simply leave them alone and let them continue to gain interest.
8 – Estate Planning – Many would say, they don’t particularly care to think about their estate because it means they have to think of their own mortality. It is better to take care of things while you still can…while you are physically and mentally able. One of the key things to do before you retire is to consider your estate planning. This should be done when all your faculties are still intact so there can be no disputing your intent afterward.
9 – Insurance – Determine what type of insurance you will need once you retire. If you are in good health, then perhaps government-provided insurance will do the trick. If you have a history of serious illnesses in your family, then now is the time to get coverage…before you need it and may no longer qualify.
10 – Bucket List – Create your bucket list so that you will be able to enjoy your retirement doing the things you love. Sitting on the old lazy boy is no way to spend the best years of your life.
Take time to do activities that you never had time for before. Volunteer, go for a hot air balloon ride or swim with the sharks. Whatever your desire, make room for that to happen.
Have fun. Time is valuable. Make the most of it now that you don’t need permission from a boss.
Things Not To Do Before Retiring
You didn’t think you could get to the end of the to-do list and not find things you should definitely consider not doing during retirement. I promise some of these are really positive and good for you:-)
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Don’t neglect yourself – just because you no longer leave the house every day for a specific purpose like work, doesn’t mean you shouldn’t look and feel your best every day
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Don’t put off your estate planning any longer. The day may come when you will not be able to take care of these legal matters. You don’t want to create a burden for those left behind.
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Don’t squander your nest egg. Have fun, live a little but stay within a reasonable budget that will keep you “in the black” during your retirement.
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Don’t become a lone wolf. Loneliness can lead to depression and other mental health issues. Stay in touch with your family and friends. Plan regular visits and outings.
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Don’t be afraid to try new things. Check some of those items off your bucket list!
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Don’t be surprised if your relationships change. Being in close proximity to family, or not seeing work colleagues daily may put a strain on all of you.
How To Know You’re Ready To Retire
These 6 signs will surely let you know that you are ready to retire. Have you taken care of these things to do before retiring?
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You are debt free and have enough savings built up to carry you for at least one year.
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You are at retirement age – be it 60, 62, or 65.
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Your retirement budget says you have planned well and are good to stop working.
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You no longer have anyone that is dependent on your support like a child in college.
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Your affairs are in order and your estate planning is complete.
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Most of all – you are ready to retire
Some Important Questions to think about before retiring
Ask yourself the following questions before you retire
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How much money will you need after retiring? A good budget will help you determine this figure.
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Should I invest in my retirement savings? If so, how, how much, and where should I invest?
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Am I able to withdraw from my retirement savings? If yes, then how much and when can I start withdrawing?
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Am I entitled to social security or any other government pension? At what age do I qualify? How much will I receive?
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How much will health care cost after retirement? Will the benefits be equal or lesser than before? Will I need to subsidize my healthcare?
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Am I ready to move on to the next stage of my life?
Biggest Expenses For Retirees
Some expenses won’t go away simply because you are now retired. Aside from everyday expenses like food, clothing, and entertainment, the biggest expenses will remain no matter what:
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Mortgage payment or monthly rent
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Insurance
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Property taxes if you own a home
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Car payments if not paid in full
Be prepared for these expenses and be sure to include them in your monthly budget planning exercise for the things to do before retiring.
Rule of 4 In Retirement
The rule of what?? Yes, the rule of 4 is important to understand and it could be your financial savior later on in your retirement years.
The rule of 4 suggests that you can withdraw up to 4% of your savings in the first year. And, it allows for inflation adjustments in subsequent years.
Withdrawing only 4% in year one assures that you will have funds in your savings for 30 years.
Of course, this is all relevant to the amount of savings you start with. Someone with $50k in savings will run into considerably more financial woes than someone with $500k in the bank at the beginning of retirement.
Early Retirement Considerations
Thinking of retiring early? It’s not unusual. Perhaps many of your colleagues have already opted to leave the workplace for the freedom of retirement. You should be prepared and know the following details before you retire.
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The cost of healthcare.
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Your total monthly expenses. Most folks are shocked by how much they spend every month.
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How much will you lose in penalties and interest by cashing out your retirement savings ahead of schedule?
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Are you ready for this drastic change of pace and lifestyle?
In Summary – Things to Do Before Retiring
Knowing the top 10 things to do before retiring is only part of your retirement story. You need to be aware of what you should not be doing, as well as the impact on your bottom line every month when you finally do sever those ties with your boss.
We would love to hear from you. Drop us a comment and share your retirement experience with us.