What to Do When You’re 5 Years From Retirement

With a few years left until your desired retirement date, now is the time to get realistic. Have you saved enough to be able to leave the workforce entirely? Will you want to work part-time, or have to in order to meet your expenses? Most people at age 65 are not going to retire completely. Instead, they’ll opt for entering the workforce “part two”, where they may go back to school or work part-time. Many workers equate retirement with tapping Social Security benefits. It’s your money, you’ve earned it, so why not take it as early as possible? What people don’t realize is that for every year they delay taking Social Security after full retirement age, they get a guaranteed 8% rate of return on their money. Here is what to do when you’re 5 years from retirement.

  1. Make a list of retirement “needs” and “wants.” If you don’t have enough savings for all your “needs,” make a five-year plan to increase your funds.
  2. Fine-tune your retirement income plans. Review your projected expenses, add up your reliable sources of income and figure out how your investment portfolio will cover the gap.
  3. Run tax projections periodically to make sure you’re taking advantage of opportunities the IRS provides, such as education credits if you go back to school.
  4. Double check your reported Social Security earnings and resolve any discrepancies now. Explore your Social Security claiming options and make sure you understand the timing of applying for benefits.
  5. Ask your HR department about the relationship between your current health insurance and Medicare, as well as what your options are when you reach age 65. Get information about any pension or defined contribution options and any other retiree benefits.
  6. Continually monitor and analyze your asset allocation to make sure it’s the right one for you. Understand whether you should move to a more conservative allocation or continue investing for growth.
  7. Research when stock-based compensation might expire and what stock awards you can keep after retirement. Plan for your retirement date accordingly.
  8. Make sure that all of your estate documents are up-to-date. Verify that your named executors and proxies know your wishes and are willing to act on them if needed.

For more information, read the full article here.