Planning to Retire in the Next Few Years? Do These Things First

If you're planning to retire in the next few years, congratulations! You're approaching an incredible milestone and about to enter a great next stage in your life's journey.

Now is the time to start taking action to get yourself and your finances ready for that future. These five steps can help set you up to get closer to the retirement you've been working so hard for so long to achieve.

1. Build a plan for your health insurance

If you'll be 65 or older, you'll most likely qualify for Medicare. Most people who qualify will get Medicare Part A (hospital insurance) for free, but there are typically premiums for other parts of the program and any supplemental you may choose to buy.

If you'll not yet be 65, you'll need a different path to cover your health insurance. The two most typical approaches are either through your employer or through your state's healthcare marketplace. If your employer offers a retiree health plan or a chance for retirees to buy into the company's insurance, that's typically the least disruptive way to get coverage, but it will likely have a high price tag attached. Even if your employer doesn't offer coverage to retirees, you may qualify to stay on its plan for up to 18 months through COBRA but this too, can be costly.

Health insurance is likely the biggest "new" expense you'll face once you're retired. Having a plan in advance for what you'll pay for that coverage will go a long way toward helping you make the transition from employee to retiree that much easier.

2. Have a plan to tackle any debts you have left

Most people see their incomes decline in retirement. Having a plan to either retire with no debt or with a clear plan to tackle that debt is a great way to live on less without affecting your lifestyle.

With a few years left before you retire, you have enough time to build and put a plan in place. By starting to address your debts now, you can improve your odds of a smooth transition to your post-work take-home pay.

3. Build an estimated budget for your spending in retirement

It doesn’t make sense to go into retirement without planning your expenses. That’s why now is the time to think about how you will be spending your time – and money – once you are no longer working.

If you plan on traveling in retirement, you may very well see your costs rise. Or, you may find that simply having more time to enjoy the hobbies and activities that you love means spending more on a regular basis. Either way, estimating what your future costs will be?can help you understand what sort of income you'll need once you stop working.

4. Understand what guaranteed income you'll get - and when

Most Americans will be able to claim Social Security?benefits at some point between age 62 and 70. Once claimed, Social Security generally provides an inflation-adjusted income to its retirees for the rest of their lives. However, you’ll need more than just Social Security to live comfortably in retirement. You might have a pension, an annuity, or other form of reliable income to help you cover your costs once you stop drawing a paycheck.

It's crucial to map out your guaranteed income sources so you know how much money you can rely on to come in, regardless of the stock market’s performance or other outside factors.

Understanding both your expected?costs?in retirement and your expected?income?will help you clearly see and plan for covering any gap you might face.

5. Start converting money from high-risk to higher-certainty investments

As a general rule, money you will need to rely on to live?does not belong in the stock market. Since you're now within a few years from retirement, it's time to consider making moves to get more of your money into higher-certainty investments. That way, you won’t have to stress about stock market uncertainty ruining your retirement plans or wonder how a sudden crash will impact your livelihood.

The big question, of course, is how much should you move. That's where an experienced professional can help. They can help you create a plan based specifically on your situation and unique goals in order to create the income you need by repositioning that money to safer investments than stocks.

However you do it, it's important to get money in higher-certainty investments?before?you need to spend it.

Get started now

With a few years left to retire, you are in the perfect spot to begin the changes you'll want to make to have a smooth transition from the working world to the future adventures that await you. You are close enough to retirement so that your estimates of your costs and interests should be reasonable, but still have time to make adjustments on your path to get there.

This golden opportunity won't last forever. The longer you wait, the more abrupt -- and likely expensive -- your changes will need to be. So, get started now and give yourself your best chance at the type of retirement you've been working and savings toward.

For a complimentary analysis of your retirement preparedness and your personalized Retirement Income for Life Blueprint, schedule now:

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