Retirement Readiness: 8 Money Moves to Consider Before Retiring

As retirement approaches, the transition involves both financial and lifestyle considerations. To ensure a smooth and secure post-work chapter, financial advisors recommend a series of strategic moves. 

From budgeting and estimating lifetime needs to reviewing investments and planning for healthcare, these steps aim to provide a comprehensive approach to retirement preparation. 

Guide to Retirement Planning

Here are eight essential financial moves recommended by advisors before bidding farewell to the 9-to-5 routine.

Calculate Cashflow and Create a Budget

Identify and categorize your retirement income sources, including steady, variable, and volatile income streams. 

Tally sources like Social Security, pensions, annuities, dividends, interest, rental income, or stocks. Consider when to file for Social Security benefits and estimate cashflow to create a retirement budget.

Estimate Lifetime Needs

Determine the duration for which your assets need to last, considering increased life expectancy. Utilize retirement calculators or seek your advisor’s assistance to estimate the required funds, factoring in family longevity and health conditions.

Tidy Up Your Balance Sheet

Reduce debt by paying down mortgages and other outstanding loans. While eliminating mortgage payments can offer financial freedom, some advisors suggest balancing this with the potential benefits of having available cash.

Review Investments

Consolidate retirement accounts from different employers or institutions to simplify management. Locate and roll over funds from old plans, and work with your advisor to rebalance your portfolio based on your retirement goals and risk tolerance.

Build a Cash Stash

Maintain an emergency fund equivalent to up to two years of expenses. This cash reserve acts as a financial cushion during market declines, providing liquidity without selling investments.

Estimate Taxes

Project your retirement income and assess whether your tax liability will increase or decrease. Consider the tax implications of Social Security benefits, withdrawals from pre-tax retirement accounts, and contributions to after-tax Roth IRAs.

Plan for Healthcare

If retiring before 65, secure health insurance coverage until Medicare eligibility. Once eligible, evaluate additional coverage options such as Medicare Parts B and D or Medicare Advantage. Plan for long-term care needs and explore payment options.

Put Other Affairs in Order

Ensure beneficiaries are correctly listed for financial accounts, update wills, estate plans, and advanced healthcare directives. Designate a personal representative or executor with power of attorney to streamline decision-making in unforeseen circumstances.

Strategic Retirement Financial Moves

Retirement planning involves a multifaceted approach, addressing not only financial considerations but also lifestyle and long-term care needs. 

By proactively taking these eight financial moves, individuals can enhance their financial security, minimize tax implications, and ensure a well-organized estate, providing peace of mind for their post-retirement years.

Collaborating with a qualified financial advisor can further refine and customize these strategies based on individual circumstances and goals.