This article first appeared in Kiplinger’s
Retirement should be like a second childhood … without parental supervision. I believe that’s doable for most people, but it takes planning.
Luckily, you can begin right now by taking the following steps.
No. 1: Decide where you want to live.
Think about the retirement lifestyle you desire, and find a location that supports it. If you want to travel, you may opt to downsize to a condo. If you want peace and quiet, a small town could be the ticket.
If you want to have more money at your disposal, you might want to move somewhere with lower taxes and a lower cost of living.
No. 2: Practice retirement now.
After you retire, you no longer have somewhere to go every day. You’re cut off from your typical social network. It can be a surprisingly difficult time. Try to avoid post-retirement depression by contemplating what you want to do and beginning it now.
Would you like to volunteer for your church? Start now. Interested in teaching for a university? See if you can teach a class now. By practicing your retirement, you can find out what you really want to do (it may not be what you think), and meet new people, too.
No. 3: Retire your debt.
Want to begin now? Make a list of all your debts, then rank them by highest interest to lowest. Depending upon the terms and conditions of the loans, it usually makes sense to start paying off the highest interest debt first and work your way down until you have paid off all your debt.
No. 4: Reconsider your risk profile.
We recommend and often employ several defensive strategies with our Money Matters clients, such as rebalancing their portfolios quarterly; reducing their exposure to equities; and creating stop-loss strategies to mitigate downside risk.
No. 5: Think about health care.
For example: Medicare may not pay for expenses incurred outside of the United States, so you might consider buying a private insurance policy to fill that gap.
No. 6: Make a budget.
Create a financial plan that gives you a high probability of achieving the necessities, and then add the luxuries if possible.
No. 7: Apply for Social Security ahead of time.
If you’re waiting until your full retirement age to collect Social Security, it’s recommended that you apply at least three months before you want your benefits to start (you may apply as early as four months before your full retirement date).
Make sure you have all the documentation needed.
No. 8: Consider rolling over your 401(k).
When making any decision about moving your money, make sure to take into consideration your age, current financial status and costs involved. It may not be the right time for you to roll over your 401(k), but it is the right time for you to study your options.