You may not have reached retirement yet, but you can see the finish line. In just a few years, you'll be there--or so you think. Retirement isn't really a predefined age, but a state of readiness to make a life change. Here are seven things to do before you make that change:
- Re-calibrate your financial plan. Between a decade of disappointing stock market returns, and savings account interest rates that have dropped near zero, the financial markets have provided unpleasant surprises for all types of retirement savers. Before you reach retirement, check to see if your savings are where you thought they'd be, and make sure your assumptions about the future (investment earnings, income production, etc.) are still realistic.
- Upgrade your investment options. While you are looking at your retirement savings, see if you can upgrade some of your investment options. Is there an under-performing stock-picker that needs to be replaced? Are there some sectors or asset classes that look more attractive now? Can you find higher savings account rates at another bank? Just as with your car, it takes a little tune-up now and then to keep your finances running at peak performance.
- Take a look at the job market. Have you accomplished everything you wanted to in your career? If not, you can still take one last look at the job market. After all, once you retire, your marketability will go way down should you ever decide to look for another job. You just might find a shot at a higher income possibility or a more psychologically rewarding position for the last few years of your career. On the other hand, if the job market looks thin, you might approach your final years in your current position with a renewed appreciation for what a good opportunity it has been.
- Consider part-time options. You might not want to completely cut the cord when you retire. See if your employer is open to a part-time, freelance, or consulting arrangement. Downshifting rather than coming to a complete stop can ease your transition into retirement, and keeping a little money coming in can't hurt.
- Maximize personal savings rates. The tail-end of your career should include your highest earning years. Make sure your retirement plan sprints to the finish, by striving for the highest retirement savings rates of your career.
- Check your health. Your health can play a big role in your retirement plans. Bad health may dictate an earlier retirement, while good health might encourage you to prolong your career. Health can also determine how active you'll be in retirement, and what your expenses will be, so make sure you have fresh information on this crucial component of your retirement plans.
- Plan your time. You should at least have a few big ideas in mind for retirement--the places you want to visit, the charity work you want to do, the book you want to write, etc. Also, have a vision for how you will spend your days. It's easy to feel adrift when you first retire, but some sense of a schedule will help you feel more purposeful.
With the right preparation, you'll find that retirement can be more than the last phase of your life--it can also be the best phase of your life.