As you start to consider retirement, there are five extremely important planning steps to take before your retirement stage.
Are you worried about what your life will be like in retirement? Do you think about whether you have enough money? Have you put all of the necessary plans in place?
Keep reading to learn about the five important steps to ensure you’re ready to live out your dream retirement.
1. Visualize Your Future
It is so important to start thinking about what your life is going to look like in retirement. A lot of people think they’ll be playing golf every day or going out to dinner every day. But when they actually get there, they realize they haven’t properly prepared for that lifestyle.
The first thing you should be asking yourself is –– what am I going to do every day in my retirement? What will my life look like? How do I plan to spend my days?
Take a step forward now to start visualizing your dream retirement and what it looks like for you!
2. How Much Money Is Enough?
Do you know how much money is enough for YOUR ideal retirement?
A lot of people are worried about how much money they have and how much they can spend. But in some cases, people have more money than they think.
So, to figure out how much is enough––plan, plan, plan. Go through your numbers, consider where you’re going to live, what your expenses are going to be, and what your income is going to be. How much are you going to get from fixed income items, such as Social Security or your 401(k)? Plus, be prepared to account for inflation in your cash flow scenario.
3. Tax Planning
Tax planning is so critical, so it’s not how much you’re going to earn, it’s how much you’re going to keep!
Knowing your tax bracket and planning accordingly is an extremely important step in planning for retirement — especially if you have a retirement account, traditional retirement account, a Roth IRA, after-tax savings or a pension plan.
It helps to have a plan before you retire to understand your RMDs, which could be lower later in life, putting you in a different tax bracket.
4. Plan for Long-Term Illness
No one wants to plan for a long-term illness, but it is one of the biggest potential drains on your retirement funds, especially if you’re not prepared.
Do you have a separate pot of money you put away for long-term care or unexpected illness? If not, it’s important to consider all options, including long-term care insurance.
5. Legacy Planning
Eventually, each of our time on earth will come to an end. What do you do to prepare yourself and your loved ones for your ultimate death?
The most important thing you can do financially is to make sure that you have all of the important documents in place: wills, healthcare proxies, power of attorneys etc.
We say: “Legacy is gifting.” –– to provide for your children and possibly your grandchildren. Don’t leave the planning to your family. Make sure you’ve reviewed those documents regularly and kept your plan up to date.