5 things you should do before you retire
After decades of hard work and disciplined savings, it was finally time to retire. If you are preparing to retire this year, keep these 5 tasks in mind, from how to spend your money to how to invest your time.
- Create a budget and spending plan:
Before retirement, determine a sum of money that you can dispense regularly. This will help you compare the income you expect to have after working with your expected daily expenses and it will give you an overview of how much you need to live comfortably during your retirement. According to the estimates of the specialists, most of the retirees need, at least, 70% of the income they received before retiring to maintain the standard of living to which they were accustomed. People with the lowest income may need 90% or more.
- Determine when to enroll in Medicare and start receiving Social Security benefits:
Currently, people can enroll in Medicare at age 65. It is important that you join Medicare as soon as you meet the requirements to do so or that you start sending the necessary documents three months in advance. If you do not register before age 65, you may have to pay fees and penalties apply. Evaluate your premiums, co-payments, and co-insurance to help estimate how much you may have to pay out of pocket.
- Transfer funds from your 401 (k) plan to an individual retirement account (IRA):
Accessing your savings during retirement can be more difficult if you keep your money in your employer’s 401 (k) plan. Transferring your money to an IRA facilitates access and distributions sometimes, even a monthly transfer to your bank account, a kind of substitute monthly salary. Transferring your savings to an IRA can also help you save money, as many 401 (k) plans charge administrative fees when withdrawing funds. Placing your savings in an IRA managed by your current financial advisor allows you to optimize the planning of the distributions since all the assets will be in one place.
- Create a long-term investment plan:
The fear of losing your savings should not prevent you from applying investment strategies in growth stocks to offset the price increases. Sometimes a well-diversified portfolio that includes a balanced proportion of stocks and bonds can help your savings reach you for your entire retirement which can last for thirty years.
- Decide how to invest your time:
This aspect plays a transcendental and sometimes surprising role when it comes to determining your financial situation during retirement. Your plans and expenses will vary in the months to come, depending on your interests, hobbies, and activities.
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