Retirement can be one of the most exciting periods of your life. After decades of working, retirement gives you a chance to really take a step back and relax.
Retirement doesn’t mean that you have to sit around all day, either. It simply means that you have the freedom to spend your time however you want to, without having to depend on a job for survival.
It is essential to prepare adequately before your retirement, though. You don’t want to retire from your job only to find that you didn’t take the necessary steps to set yourself up for retirement success.
In this article, we will walk through 10 steps you need to take before making the announcement that you are ready to retire.
1. Pay Off Your Big Expenses
A big part of retirement is being able to live on a pre-set income.
You don’t want your increase in free time to come along with an increase in spending. This is why it is best to pay off any significant expenses before taking your leap toward retirement. This means that in an ideal world, your house, cars, and even home renovations will be done before you leave your paycheck behind.
2. Get Familiar With Your Investments
Before you leave the security of your job, make sure to familiarize yourself with your investments.
You want to make sure you understand exactly where all your money is, what your expected returns are each year, and that you know exactly how much you should plan on spending.
3. Look Into Your Employer’s Pension Plan
You want to make sure you understand the details of your pension plan before you take the leap into retirement.
It will be far easier to understand your retirement plan when you are still at the company and can easily ask questions to HR. And don’t just think about this current job. Make sure you know what retirement you have with any previous companies you worked for.
4. Consider Consolidating Your Finances
Chances are, by the time you are getting ready to retire, you’ve probably worked for a variety of different companies and maybe had entirely different careers.
This might leave you with a piecemeal retirement plan. It could be a good idea to roll over your different retirement investments into one consolidated fund. This is something that a personal finance expert can help you out with.
5. Understand Your Social Security Benefits
It is important to be well-informed about your social security benefits before you retire.
Social security is intended to replace around 40% of your pre-retirement income, not the entire amount, so you shouldn’t plan on retiring using social security alone. You want to make sure you stay informed about how much you can expect to receive from social security and at what age you can start getting these funds.
6. Plan Your Time
Though retirement is about financial freedom, there is more to think about than just finances.
You will want to make sure you are spending your time in a way that is valuable to you. Maybe that means volunteering, taking on a new hobby, or taking more of a role in raising your grandchildren. Whatever you want to invest your time in, make a plan before you take off time from work so you don’t find yourself bored.
7. Build Your Social Group
Are there any close friends you have who are also on the brink of retirement? Try talking about what you might do together with your newfound time.
If your friend group tends to be younger or you are simply retiring younger than your friends, you might want to look into making other friends who are newly retiring or preparing to retire.
8. Plan Your Travel
Many people enter retirement with dreams of finally traveling the world.
Take some time to lay out your travel plans before you embark on retirement. It can often be cheaper to travel than to have a stable lifestyle back at home, especially if you are traveling in countries with a lower cost of living than your home country.
9. Make Your Bucket List
One of the biggest mistakes you can make when you retire is to think of it as simply getting away from having to work.
Instead of making retirement about avoiding something unpleasant, think of it as a chance to fulfill your biggest dreams. Creating a retirement bucket list can help start you off on the right foot.
10. Talk With Your Partner About Lifestyle
If you have a partner who is looking to retire with you, make sure you work closely together to clarify what you want post-retirement life to look like.
Retirement can be an exciting time for couples, but it also requires a lot of communication to make sure all parties are happy.
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