Planning for retirement can be a daunting and worrisome task. However, there are eight money moves one can make the year before retirement that can build a solid financial foundation.
An odd step to many, but an important step nevertheless, is to actually begin talking about retirement. Most financial experts say that the best planning before retirement should be done five years before the final year. However, one year before retiring is an acceptable time.
Budgets are an integral part to the post-retirement life. Many people assume that they can live within a smaller budget retired. However, this is seldom the case, as many people end up purchasing more goods and services, such as traveling more, when they are retired. Financial experts recommend tracking the common expenses in the last year before retirement and preparing for those expenses in the future. Bills like the mortgage and utility payments, regular habits like going to eat, and, most importantly, medical expenses should be tracked and considered in future budget costs.
3. Pay Off Debts
In the last year of working before retirement, paying off debts or most debts can free up a budget. If the mortgage is almost complete or there is a credit card with a balance proving to be a nuisance each month, consider paying them off.
4. Control Investments
Before retiring, certain investments should be stopped or curtailed. With revenue becoming more delicate during the retirement years, risky investments are not recommended. Closing up some investments in the last year before retirement and conservatively investing after retirement is recommended.
5. Coordinate Social Security
Social Security benefits are appreciated at later ages, such as after 65 to after 70. However, some people need to start receiving Social Security at earlier ages, such as 62. Social Security requires applicants to apply three months before the applicant wants to receive benefits, so using up the remaining nine months in the year to figure out when to apply for Social Security is important.
6. Sign Up for Medicare
The Medicare system has four main plans (Parts A, B, C, D) that have different sign up times and exceptions under the Department of Health and Human Services. Each Medicare Part covers different medical procedures and should be reviewed carefully during the year before retirement.
7. Create a Portfolio
A portfolio is a good way to organize all the financial revenue streams during the retirement years. Extensive research may be needed to find the right portfolio for one’s investments, stocks, and bonds. Portfolios need to be resolute during the many market realities that could happen during a long-span of one’s retirement years.
8. Update All Legal Documents
With retirement nearing, preparing or finalizing wills, health care proxies, and documents a New Jersey estate planning attorney recommends updating. Providing courses of action or providing documents and policies with beneficiaries are highly recommended to be completed during the year before retirement.
Image Credit: 401(K) 2013