As retirement approaches, it can be scary to have an impending feeling of permanence coming. Once you hit retirement, you want to ensure that you have enough money to make it through. It’s normal to not want to go back to work so a strategy is important to see that doesn’t happen. Fortunately, you can get expert advice with a five-year plan to help you prepare for retirement. Keep reading for some tips to get started.
Know how much money you need
Having a budget is crucial to managing your money no matter what stage of life you’re in. Whether you’re just starting your career, building your family, or approaching retirement, it’s important to have a strong understanding of how much money you need to get by each month. When you’re planning for retirement, you need to look more into the future than what is typical when making a budget.
When you’re five years away from retirement, you should have an idea of how you want to spend your retirement. Are you planning on traveling? Do you have hobbies you’d like to pursue? Set goals for yourself so you can budget accordingly. This makes it easier to build a monthly and yearly budget for you and your partner.
Evaluate your savings
After you’ve put together a budget, take a look at what you have saved already. Take into consideration interest for the money that will be sitting in your account after retirement as well as tax implications of dispersals. Evaluating your savings five years before retirement should give you enough time to decide if you’re on track for retirement. If not, you have the option to make catch-up contributions to your nest egg or work beyond retirement age to add more money to your savings.
Keep in mind that you likely won’t have much money coming in during retirement if you have any coming at all. An insurance policy will help to protect you, your loved ones, and your assets. You can work with a financial advisor to find insurance coverage for your home, boat, RV, crops, and more. These will keep you financially secure should something happen to your home.
In addition to insuring your assets, you’re going to need to insure yourself and your partner. This comes in the form of life insurance and health insurance. Having a life insurance policy in place will protect your partner and your heirs when you pass away. It will pay out a designated amount to help pay off debts, pay for funeral expenses, and assist with financial security. However, you need to make sure that you’re covered while you’re still alive. While Medicare plans are provided by the government, you should still plan for monthly health insurance premiums with at least a Medicare Part D plan to cover any needed prescriptions.
Save, save, save
You can never have too much money in retirement. Some seniors might say that they want their last check to bounce, but it’s impossible to have such precision when it comes to planning for retirement. There’s no way to know exactly how long you’re going to live in retirement, so it’s better to overshoot the mark and leave some extra money for your heirs than to come up short and be left wondering what to do next. Save as much as you can during the five years before retirement and you’ll find yourself more comfortable in the years to come.
Get a financial advisor
If you’re not sure how to get started putting together your five-year plan before retirement, meet with an expert financial advisor at a company like OWLFI. Their team can help you prepare for retirement so you can feel comfortable with the money you have saved.