Rosalind Evans
If retirement is just five to 10 years away, getting organized and planning is crucial.
According to Atul Gawande, author of “The Checklist Manifesto,” even experts rely on checklists to navigate complex processes. Whether you consider yourself an expert or not, having a retirement planning checklist is essential, especially as you approach the final years of your career.
Here are some key steps recommended by experts that should be on your preretirement checklist:
- Determine your expected retirement date:
Consider setting a goal date at least five years in advance. You may miss crucial financial planning opportunities.
- Estimate retirement income and expenses:
This involves calculating your anticipated retirement expenses, including healthcare costs, and assessing potential income sources like Social Security, pensions, and personal assets. Utilize tools like the Society of Actuaries’ longevity calculator and online worksheets provided by financial institutions.
- Plan for long-term care costs:
Evaluate options such as long-term care insurance, hybrid life/long-term care policies, or asset-based annuities. Work with a long-term care planning specialist to develop a comprehensive plan.
- Manage and mitigate retirement risks:
Educate yourself about risks such as longevity, inflation, market volatility, and sequence of return risk. Build emergency reserves to prepare for unexpected expenses.
- Calculate your accumulation target:
Determine the amount of money you need to accumulate to support your desired lifestyle in retirement. Maximize contributions to retirement accounts and take advantage of catch-up provisions for individuals aged 50 and older.
- Adjust your investment portfolio:
Assess the balance between income investments and equities based on your needs and risk tolerance. Consider maintaining a portion of your portfolio in stocks to hedge against inflation.
- Evaluate mortgage options:
Decide whether to retire with or without a mortgage. While it was once common to retire debt-free, many retirees now carry mortgages. Assess the financial implications and consider your circumstances.
By following this comprehensive preretirement checklist, you can set yourself up for a smooth transition into retirement and ensure financial security in your golden years.
