preparing for retirement

5 Steps to Start Preparing for Retirement

Preparing for retirement can prove both an exciting and stressful experience. For most, this involves trading in the stable income of career work for a more relaxing day-to-day lifestyle. To accomplish this, having your finances in order can play the most critical role in ensuring that you are still able to provide for yourself. 

We work with many people of different professional backgrounds as they prepare to enter retirement. Based on our countless conversations with our clients, we want to provide you with some important steps to ready yourself for your post-career stage in life. 

Tip 1: Analyze Your Current Outstanding Debt

Do you have any outstanding debt that you would like to pay off before retiring? Some common sources of significant debt include credit cards, mortgages, and car loans. Plan to pay as many of these off as possible before you plan to retire. 

As a retiree, you will be living on money that you had saved during your career. This means no more holiday bonuses or overtime hours to accrue extra dollars. Develop a timeline to address these outstanding debts while you are still generating income. 

Homeowners may also want to consider downsizing their living space in retirement. For example, if you have adult children that live independent lives and only need 1 or 2 bedrooms, you may want to sell your larger home, use that money to pay off your mortgage, and allocate any leftover revenue from the sale to put towards a down payment on a more affordable new living space. 

Tip 2: Review Your Current Monthly Expenses 

When preparing for retirement, you should review how much money you are spending each month in total. Are there recurring monthly payments like membership fees or subscription services? Are you taking advantage of their benefits enough to justify paying for them on retirement income? 

Consider your current monthly expenses to determine a monthly budget. As you do this, be sure to note these important items: 

  • Home utilities and property taxes
  • Grocery and dining expenses
  • Gas and car maintenance 
  • Personal enjoyment (shopping, cable subscriptions, etc.) 
  • Membership and subscription fees 
  • Medical costs (doctor/specialist visits, prescriptions, etc.) 
  • Emergency savings 

Look through your expenses and identify any area where you can save money through either eliminating or better managing them. This can help you create more financial wiggle room to save for personal enjoyment and emergency needs. 

Tip 3: Audit Your Investments 

Audit your investment portfolio to identify any that you might want to sell prior to retirement. You can use this new income to reinvest in new ventures, acquire hard assets like property, pay off debt, or save for when you do retire. 

The best part? You don’t have to do this alone. You can work with an experienced investment manager to help you identify opportunities to grow your portfolio and expand your revenue. 

Tip 4: Determine a Monthly Budget 

When you are entering your post-career life, you will no longer benefit from new paychecks. Instead, you will need to set a monthly spending budget for yourself. After auditing your existing debts, expenses, and investments, you can determine how much money you will need to afford your month-to-month lifestyle and see if this aligns with your current savings. 

Tip 5: Set a Retirement Timeline 

Determine the approximate date you plan to retire. You do not need to decide on a specific calendar date right away, as that might place too much unnecessary pressure on you to hit these goals. For example, you may want to set “Winter 2030” as your retirement date instead of “December 12, 2030”. 

Once you have this timeline in place, you can better utilize your income to position yourself for a financially comfortable retirement. Use the remaining time that you are still generating regular income to your advantage. 

Ready to Start Preparing for Retirement? Get a Free Financial Audit

We assist our many neighbors in Southern Idaho in preparing for retirement each day. Our team of financial advisors can provide expert insights to help you develop a realistic plan to enter a post-career life with confidence. 

If you are interested in preparing for retirement and would like some initial information, don’t hesitate to participate in our free financial audit or contact us directly.

Start planning for retirement today!