The countdown to your retirement gives you the time to focus on getting ready for it
By Matt Smith
You’re retiring in five years and couldn’t be happier. It’s hard to stop daydreaming about all the time you’ll be spending with family and friends and on holidays and hobbies. It’s perfectly natural to be distracted from the question of how to make that a financial reality. This is why it’s a great idea to use each of the coming years to consider a different aspect of your retirement, setting yourself up for the greatest possible rewards.
Five Years Out
Congratulations! The end of your working days is in sight, and you’ve still got plenty of time to plan things out for the future. Now it’s time to take stock of your financial status. What are your savings? How comfortably will you be able to live based on the combination of those and your pension? Will you be able to cover your needs, or do you need to make some changes in your income or spending habits?
Four Years Out
Don’t just focus on that first glorious day without work. Now’s a good time to start thinking about the later years of retirement, as well. If you’re thinking about moving to a retirement community at some point down the line, you can start doing your research now.
Three Years Out
Now that you’ve spent a year focused on the big picture, what about the day-to-day? Sure, you’re probably dreaming of finally taking that big vacation, but consider what you’d like to be filling your days with when you’re at home.
You should also be thinking about your housing situation. Do you plan on staying in your current home or downsizing? If your house needs work, why not take care of maintenance and those renovations while you’re still earning an income?
Two Years Out
A great idea is to “practice being retired”—that is, to try living on the amount of pension income and income from savings that you expect to be getting each month. Doing this a couple years before retirement gives you some time to fine-tune your budget before your salary-earning days are over.
One Year Out
You’re almost there! As the start of retirement approaches, now’s the time to be taking a serious look at your budget. See where you can trim expenses and cut down on spending. Review your investment portfolio, as well, and consult with any advisors you can.
Photo: iStock/kupicoo.
