Steps Everyone Should Take Before Retiring

1. Figure out how much money you will need to spend each month. Do this on an after-tax basis. A good place to start is how much you’re spending now and then back out things like the 401k investments and IRA contributions and Social Security and medical insurance premiums.
2. Determine what your sources of income will be. You need to have secured new sources of income that are not time intensive and are sufficient enough to maintain your lifestyle choises.
3. Estimate the taxes on your sources of income. Part of your Social Security income may also be taxable. This is an important step because you can only spend the after-tax amounts. It is super important to have this worked out so that you know the limits of cash expenditure.

4. Run pension estimates. Assuming you will have a pension from your employer, they probably have an online pension estimator that estimates your pension based on some formula of years of service and your age. Make sure you’re not leaving money on the table by leaving just a little too soon. Depending on your employer’s formula, continuing to work for another month or two could mean a fairly significant increase in pension benefit.
5. Review your investment strategy. you will need to pull income from your investments but also grow them for later in retirement. Your investment strategy will need to help you meet both of these needs.
6. Estimate the cost of health care. Healthcare is also a very important factor in that your health and wellbeing will determine your output capability in terms of performance and the sustainability of your sources of income.
7. Try to have your mortgage paid off before you retire. If it’s not paid off, look into refinancing before you retire. One of the major recurrent expenditure in a household is not power or even food, it is housing. If you have your mortgage paid off means that the burden is lifted thus giving you headway to perform other tasks with the money you save on that.
8. Decide what you will do when you don’t have to get up and go to work anymore. And what your spouse will do. When you have had a routine lifestyle for years then you retire, the free time you have can literally drive you insane. So plan ahead and know what you will be spending your time doing and how you can monetize that time to fit your lifestyle limits .

Post Author: kgachanja

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