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Five years and counting to retirement
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Earlier I wrote about planning for retirement with a ten year plan in mind. If you have 5 years to go before you plan to retire, here are some suggestions to get you started.
5 Years to Go: Understand your options. You can get a current estimate of your Social Security income at http://www.ssa.gov/planners/calculators.htm. This is a good time to review all investments, including pensions from current or former employers.
4 Years to Go: Make sure you have paid off all debts, including credit card debt, educational loans or car loans.
3 Years to Go: Evaluate your life insurance needs. If you are paying premiums on a large life insurance policy, but are no longer supporting dependents, consider redirecting those payments.
2 Years to Go: Plan your retirement lifestyle. Will you work part-time, travel, pursue a hobby? Create your retirement budget. Begin living on what you anticipate your post-retirement income will be. A good starting rule of thumb is 75-85 percent of current income. Save the rest of your income, or use it to finish paying off debt.
1 Year to Go: Apply for Medicare. The Social Security Administration recommends applying for Medicare three months before you turn 65.
Of course many of us will choose not to retire at 65. Remember that these action items are simply guidelines to consider whatever age you actually stop working full time. Each task is an important step along the road to retirement. By following this road map, you can plan for your own financial security, no matter what the future holds.
But don’t forget that retirement planning is about more than money. It is a very bad idea to stop working without an idea of what you want to do next…and that doesn’t mean clean out the garage or visit the grandchildren. Of course financial security is important, but emotional security is equally important. Money doesn’t insure happiness in retirement, but boredom, indecision and a lack of social support can almost guarantee an unhappy retirement. So think about your finances, but also think about your dreams, new ones or old ones, and plan for a way to follow them.
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