Once you reach your goals, get ready… Retire! If you’re in your 50s or 60s, you’re probably 10 years away from retirement. Maybe you’re only a year away from retirement. Regardless of the exact timing, you are at home in the race of a lifetime heading into this exciting time in your life.
If you have 5-10 years until retirement, here are 15 things you can do now to improve your future.
1. Now or Forever: Find More Money and Save
For pre-retirees, this is the last chance to save enough money to retire comfortably. You may be surprised at how much you can save a few years to 10 years after you retire.
Motivated by the impending retirement date, pre-retirees should sit down and save as much as possible.
- Reduce expenses.
- Bank all your tax returns, raises, bonuses, inheritances and other unexpected money.
- Consider a side job.
- Explore ways to generate passive income.
- Save as much as you can. (Unless you’re someone who already has a lot of savings.)
2. Largest catch-up contribution
If 10 years to retirement isn’t enough incentive for you, know that there are additional tax benefits for pre-retirees. The government is encouraging workers over the age of 50 to save more than younger workers by increasing contribution limits to 401(k) and IRA accounts.
according to IRS:
- People age 50 and older can add up to $7,500 in catch-up contributions to their 401(k) savings in 2023. This is in addition to the $22,500 donation limit.So the total he can contribute to these accounts in a given year will be $30,000
- For IRAs, the annual contribution limit for 2023 is $6,500, or $7,500 if you are 50 or older.
Learn more about tax benefits for over 50.
3. Open an IRA instead of just relying on a 401(k) (or vice versa)
Did you know that you can maximize your contributions with multiple types of retirement accounts?
keep it up! Can he set a savings goal of $37,500 if single and $75,000 if married?
After age 50, you can put $30,000 into a 401k and $7,500 into an IRA. And if she’s married, she can double that amount and save $75,000 each year in a tax-advantaged account.
But your savings don’t have to stop there. If you can save more, put that money into taxable savings. I would be happy if I could get cash later.
4. Are you expecting an inheritance? Please check in with your parent/guardian
According to a survey from Charles Schwabmore than half of young people (53%) believe their parents will leave them an inheritance, compared to an average of 21% who actually received some kind of inheritance between 1989 and 2007. .
If you’re counting on an inheritance to support your retirement, it’s a good idea to have a frank discussion with your mother, father, aunt, or uncle. Health care costs are soaring, and stories of families who spent every last dime simply because they had to live longer than expected or had to enter a nursing home that could cost them a ton of money. can find.
You may also need to take steps to protect your inheritance. You may consider purchasing long-term care insurance or life insurance for your parents.
5. Get out of debt
Debt can become a problem after retirement. It’s best to work hard and pay it back before quitting your job and away from the masses.
According to the Employee Benefits Institute (every), 77% of households headed by people aged 55-64 or older are in debt. And the average debt amount is $108,011. Worse, these rates have risen since the end of the pandemic.
Retirement income typically dwindles to a certain level that comes from social security, pensions, and other retirement savings accumulated over many years. Having a steady income means that tomorrow you won’t have more money to pay off your debt than you have today. You’ll simply pay more interest and you’ll be wasting money every month if you’re in debt.
Here are six ways to live debt-free in retirement. Try a debt-free scenario with the NewRetirement Retirement Planner and see the difference in your household budget in action.
Five to ten years until retirement means you have time to pay off your debts. Now is the time!
6. Discuss with your spouse
a investigation A Fidelity Investments study found that finances and retirement planning are very difficult subjects for couples.
In fact, the study found that less than half of couples make routine financial decisions together, such as budgeting and paying bills, and 38 couples discuss retirement investment and savings strategies together. It turns out that it is only a percentage.
Another study found that couples may even disagree on how they want to spend their time in retirement.
This lack of communication can be a problem. Retirement Planner can help facilitate conversations about what you want in retirement and how much you can afford.
With 10 years until retirement, there is still plenty of time to make adjustments and compromises to band together for a happy future.
7. Budget: Take stock of current spending and plan future projects
Accurately predicting how much you will spend in retirement can go a long way toward achieving financial stability. And the less you spend, the less you need to save.
When budgeting for retirement, consider that your expenses can fluctuate. Most people spend a little more in retirement, spend less as they get older, and more as their health declines.
Learn more about how to forecast your retirement budget and experiment with different spending patterns with Retirement Planner. The NewRetirement Retirement Planner allows you to set as many different levels of spending as you can imagine for different periods of your life. You can also create detailed budgets for the entire future.
8. Plan for out-of-pocket medical costs and potential need for long-term care
If you have about 10 years until retirement, you should think carefully about your future medical expenses. He has three categories of spending that need to be considered:
Healthcare after early retirement: If you retire before age 65, funding for medical care before you qualify for Medicare can be expensive. Check out 9 ways to cover your medical bills after early retirement.
Medicare: If you think Medicare will pay for everything, you’re dead wrong.according to fidelityA retired couple with an average age of 65 in 2022 could need to save about $315,000 after tax to cover medical expenses in retirement.
Long-term care: Not everyone needs long-term care, but everyone should have a plan for how to pay for it if it does. Here are 10 alternatives to long-term care insurance.
NewRetirement Planner has some very robust features to help you predict your medical expenses. With this system you can:
- Enter Early Retirement Expenses
- Estimate your Medicare out-of-pocket based on where you live, your health status, and the type of insurance you have
- Consider payment options and planning options for long-term care needs
9. Maintain the “right” asset allocation and start thinking about income planning
Some experts recommend becoming more conservative in your investments as you get older. However, most advisers recommend trying to earn earnings that can at least keep up with inflation, or even drive inflation in your favor.
The right asset allocation for you depends on your goals, time horizon, and overall financial profile. Explore easy ways to develop an asset allocation strategy that works best for you.
But beyond worrying about asset allocation and returns, now is the time to start thinking about your retirement income plan. How are you going to turn your assets into income?
10. Consider your own needs (present and future) before helping a child or aging parent
Five to 10 years into retirement, there are often plenty of mouths to feed: who you are now, saving for the future, kids in college, parents with financial, medical challenges, and long-term care. I have.
If you can’t afford to put money into everything, you have to prioritize and make tradeoffs. Many financial advisers say that while there are options for college loans and public assistance for long-term care, they have no financial options other than working and saving to pay for retirement, so they are more likely to spend more than family. would also advise retirement savings.
Consider ways to finance your child’s education and use our retirement planner to go through different scenarios and find a solution that makes you happy.
11. Know what you will do after retirement
When it comes to planning for retirement, it’s easy to get caught up in the financial side of things. But planning what to do after retirement is probably more important. The happiest retirees are purposeful and focused interests.
It’s time to start dreaming!
12. Consider how you will spend your time after retirement
Think carefully about where you will live after you retire. This is the only time in your life when you can choose a place to live that suits your temperament and interests, without being tied down by your connections or your job.
Moving can also help your family finances and allow you to retire early if you can let go of your home equity and add it to your retirement savings.
Check out this complete guide to downsizing for retirement, or explore different housing scenarios with Retirement Planner.
13. Set the date. Plan your celebration!
Make your future specific. Set a specific retirement date and actively envision the future you really want. Please tell your friends and family. Plan your retirement party!
These are all proven tactics that can help you reach your goals.
14. Be happy now
Times of transition are difficult for happiness. You leave something behind and look forward to the future, but happiness experts suggest that contentment comes from staying firmly grounded in the present.
Let’s take a look at eight ideas on how to live your retirement.
15. Plan proactively: Don’t let things go your way!
If you’re preparing for an event, there are many things you can do before you hit the starting line to ensure your success.
Retirement is no exception. If you’re in pre-retirement, now is your chance to do what you need to do for a secure future. Use deadlines as motivation.
NewRetirement Retirement Planner helps you set goals, make plans, and maintain and update your strategy over time. The tool is easy to use, but it constantly performs thousands of calculations behind the scenes to give you personalized ideas for improving your wealth and safety.