If you’re within six months or so of retirement, there are certain things you need to do now to help prepare yourself for the transition into retirement.
Throughout this retirement preparation process, there will be times when you feel as though you are making a series of rapid-fire micro decisions as you work through Social Security benefits, Medicare options, pension elections and retirement account distributions.
The decisions to be made are many, and understanding the long-term ramifications of those decisions is paramount, considering that your retirement years could be as many as those spent working.
The numerous options you will face can become a labyrinth of choices leading many people to attend YouTube university in search for answers, while leaning on friends and co-workers to fill in the missing pieces. The truth is, people underestimate the complexities that exist with preparing for retirement and find themselves over their head.
Unfortunately, without understanding the long-term effects of one decision over another, a retiree may be well into their retirement before problems begin to surface. For instance,
- Inflation will erode your income over time.
- Longevity may require your money to last longer than you thought.
- Market volatility can deplete your resources.
- Heath care expenses can potentially absorb most of what you have.
By the time these risks are exposed, retirees find themselves stuck. That is why retirement planning shouldn’t be viewed as a rapid-fire micro decision-making process but rather a time to design a master plan focused on what you can control and protecting yourself from what you can’t.
Think of it like building a home … you wouldn’t begin construction without first having blueprints drawn up. Your retirement plan is the blueprint for your retirement, while Social Security benefits, Medicare options, pension elections and retirement account distributions are your building materials.
6 Things You Can Do for a Sustainable Retirement
Going back to the home construction metaphor, to ensure you have your bases covered and are retirement ready, first consider the cost of the project. It is better to estimate the cost of your retirement now to uncover potential problems before actually retiring. Start by carefully evaluating your current thinking about your situation.
1. Develop an income plan detailing exactly how much income you will need each year to fund your retirement lifestyle
Now, before skipping over this you should consider that your lifestyle will change — along with your tax situation — which means that the amount you need now to live on will not be the same when you retire. You may need to budget even more for your early …….