If you are approaching retirement, it’s a good idea to review your finances and develop a strategy for your final working years. Take the time now to perform a reality check on your retirement resources and expectations.
Use These Tips to Help Prepare for Retirement
- Create a retirement budget. Start by tracking your current expenses. Then add or subtract items that you expect to be different when you retire. For example, you may have to pick up the tab for health insurance that was previously provided as a fringe benefit by your employer.
- Estimate your retirement income. Will your resources be adequate to cover your projected retirement expenses? For example, if you retire at age 60, your resources may have to last another 30 years or longer. You may need to increase your savings, or you may need to work longer than planned to provide yourself with a comfortable retirement.
- Evaluate your investments. For example, now may be the time to start moving into more conservative investments. Perhaps it makes sense to downsize your home to reduce your housing costs and free up money for other types of investments.
- Pay down your debt. Don’t take on new debt. Get a handle on your current debt to prepare yourself for a reduction in income when you retire.
- Decide where you are going to live. If you are going to relocate, don’t forget to adjust your budget for the cost-of-living differences between the two communities. Also, don’t forget to factor in moving expenses.
- Make wise “exit”. For example, if you qualify for pension benefits, you will be faced with a number of binding decisions when you leave your company. You may be eligible for COBRA coverage (extended health insurance) which could help bridge the gap between retirement and Medicare eligibility at age 65.