In order to have a smooth transition into retirement, you should start planning as early as possible. If you're planning for your retirement, then it's important to identify your retirement needs first. Once this is done, it would be easier for you to determine your retirement expenses and income.
As a first step to your retirement planning, you should start investing in the retirement plans offered by your employer. You can also start investing in IRAs. Estate planning is an important aspect which you should decide upon before you retire. Apart from this, allocation of assets in bonds, stocks and cash will also help you in getting a secured retirement income.
Here's a checklist which can help you prepare yourself for this important financial goal in a better way:
- Accumulating emergency funds: It is essential to build up enough emergency savings which will help you in dealing with sudden monetary crisis after your retirement. Investing in insurance is also a good way to save yourself from unforeseen circumstances. You may even consider working part-time in your early retirement years in order to increase your savings.
- Social security income: You will have to apply for social security income 3 months before the date from which you want to collect the benefits. You can apply for the benefits as early as 61 years and 9 months of age. You may even collect your deceased spouse's social security benefits at the age of 60. If you’re disabled, then you would be able to receive the benefits at the age of 50.
- Beneficiary designation: Make it a point to update beneficiary designations on your financial paperwork and retirement account. Consult a lawyer who can help you review your powers of attorney, will, trust, as well as beneficiary designations. This will help you know whether or not you and your beneficiaries are appropriately protected.
- Balance your asset allocation: Balancing your asset allocation in stocks, bonds, and cash in a better way would help you increase your retirement income and thus safeguard your future. You may even consult a financial advisor in this regard.
- Healthcare: Research and review your healthcare options once you retire as it won't be covered by your employer any longer. Make sure that you've long term health insurance coverage for yourself. Remember that your Medicare application process, timelines, and premiums may vary depending upon your age and social security income. You may have to pay higher premiums if you apply late.
- Debt free retirement: Make sure that you pay off your car before your retirement. Also, reduce your mortgage debt as much as possible before you retire. Paying off your credit cards with higher interest rates earlier would also help you in lead a better life after retirement.