Retirement Milestones: Make Sure to Hit All These Before Retiring
Retirement dreams can easily turn into nightmares without careful planning and meticulous saving.
To avoid tarnishing your golden years, commit to a long-term retirement roadmap that prepares you for a secure future and protects you from outliving your savings. And make sure to hit these financial milestones before you retire:
- Have a sizable emergency account. Even the strongest person amongst us is likely to experience an emergency sometime in his life. It may be health-related or something else entirely: sudden damage to your home or car, a move, a child needing support, and on and on. Bottom line: be prepared to have a fluid account of at least six months’ worth of living expenses readily available beyond the amount in your nest egg. Note that the funds in your retirement accounts may be tied up in investments and relying solely on those for emergencies can cost you needless withdrawal penalties and lost future growth potential.
- Own your home free and clear. For most Americans, their mortgage is their biggest expense. Paying off the mortgage before retirement eliminates a tremendous financial burden, especially if retirement puts you on a limited income. Also, older homes usually need more maintenance; eliminating your mortgage payment frees up money to cover such expected and often costly home repairs.
- Payoff credit card debt. Most credit cards charge high interest rates that compound daily. Eliminate mushrooming debt in retirement by committing to consolidating and paying off all credit cards debt before you quit your job. Not only will your retirement be more financially secure, but your stress level will also be significantly reduced.
- Save enough to last throughout your retirement years. Thanks to modern medicine, lifespans have dramatically increase for the last fifty years. Make sure to save enough to cover you for at least 2 decades post-retirement. The general rule of thumb is build a nest egg that will cover at least 80% of your current living expenses. While many costs may be eliminated in retirement, others will certainly increase. Meeting with a tax lawyer is highly advisable as your retirement income may bump you into a higher tax bracket thanks to required minimum distributions, social security payments, and other investment dividends. Annual meetings with a financial advisor are also strongly recommended to monitor your portfolio and keep you on track.
Whether retirement means dream vacations or simply extra leisure time at home, being prepared can make all the difference. For some, it may mean delaying retirement and working just a few years longer. Adjusting expectations, downsizing and cutting retirement expenses may also be necessary. In any case, retirement planning is critical because once you leave your job, it is highly unlikely to be able to return.
At Silverman Financial, we work with you to create a personalized retirement roadmap that meets your current and future needs. We make sure you are on track to hit critical milestones before you retire.
