4 Important Things To Know As You Approach Retirement

Expert Author

The time is finally here! After working for over 40 years,your retirement is right around the corner. Before you begin your transition from working every day to sitting back and enjoying life, do you know if you’re prepared for the change? When you are about five years away from retiring, you should know these 4 important things to make sure you have a smooth transition.

1.    Pick A Date

- Choosing a date to retire has a couple of benefits. First, a set date gives you an actual target that you can work towards. For example, if you have a date set five years from now, you will do everything in your power to make it happen. Second, a retirement date also defines the amount of time you have to prepare. This will make it easier for you to figure out what you need to do to be ready when you stop working.

2.    Inventory Your Finances

 - You need to figure out exactly what you are going to need to live when you retire and what you have available to meet your needs. You are going to need to know your expenses and sources of income. Generally, when you retire, you are going to need between 70% and 80% of your current income. Develop a budget of your living expenses so you know what you are going to need. Make sure you factor in all of your major expenses including the mortgage and healthcare costs. Next, you need to figure out how you are going to pay the expenses you have. There are three main sources of income than retirees have available to them. There are social security benefits, employer-provided benefits and personal savings accounts.

3.   3.    Run The Numbers

- Now that you have inventoried your finances, you need to run the numbers. This will help you assess your ability to retire on your set date. Doing this at least five years before you retire gives you time to make any needed adjustments to your retirement plan. You might need to save more money, retire at a later date or both. This will give you a better understanding of how prepared you are financially. You need to run the numbers annually from this point forward to ensure your retirement plan stays on track.

4. 4.    Define Your Retirement Lifestyle

 - Being mentally prepared is as important financially prepared. If you do not have anything planned to keep you busy, the transition into retirement can be difficult. You need to view retirement as a time carved out for you to reward you for all the years of hard work. The happiest retirees are those that have plans for what they will be doing with their time. It could be spending time with your family, pursuing a hobby, working part-time or traveling. Take time to give a serious thought about what you want to do when you retire.

The immediate years before retiring are important planning years. As you approach retirement, it is necessary to make sure you are both mentally and financially prepared for the challenges you are about to face. As a result, you will have a smooth transition into retirement.

Devin Johnson's Website
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Article Source: http://moneysolution.com/retirement/4-important-things-know-you-approach-retirement-355

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