8 Critical Things to Include on Your Pre-Retirement Checklist

8 Critical Things to Include on Your Pre-Retirement Checklist

Many people struggle to answer the question of whether or not they are ready to retire. Whether you have been saving for decades or working hard to catch up, it can be difficult to decide when it’s time to call it quits for good. Too often, people focus solely on the amount of money they have to support themselves. While money is critical, you also need to spend some time planning for the future, which is ultimately what will allow you to retire with confidence. While there are a number of items that should be included on your retirement checklist, some of the essential ones include the following:


  1. Draw down strategy

Typically, people have several different accounts when they retire. A draw down strategy refers to the amount that will be withdrawn from these accounts and when over the course of retirement. Not all accounts are created equal, so you need to have a strategy. Typically, retirees draw from their taxed accounts first and leave their tax-advantaged savings, such as Roth IRAs, until later in retirement. Both 401(k) plans and traditional IRAs have minimum required distributions after individuals reach the age of 70 1/2, but Roth IRAs do not come with the same mandates. Thus, they can continue to grow without being touched for as long as people can manage without them.


piggy bank


  1. Housing expectations

A critical part of a long-term retirement plan involves housing. While some people stay in their homes once they retire, many choose to purchase something smaller to save money. Ideally, you should have an idea of where you will live once you retire so that you can budget for housing expenses, whether that means continuing mortgage payments, purchasing a new home, or paying rent. Of course, housing needs may change over the course of retirement. Changes are fine as long as you have given them thought before retiring and budgeted money to cover your moving expenses.


  1. Comprehensive budget

You should attempt to complete your retirement budget, including monthly and annual spending expectations, long before you retire. A budget can help you to figure out exactly how much you should set aside before you decide to retire. Since a number of items go into a budget, it is important to consider all your expenses, ranging from housing to travel. People often put travel on the top of their list of things to do once they retire, then realize that they did not budget enough for the number of trips that they wanted to take. Being realistic is critical in ensuring a rewarding and fulfilling retirement.


  1. Income sources

Retirees should have a clear idea of exactly how much money they will receive each month and year. In addition to drawing from retirement accounts, they will also receive Social Security benefits. Some people will also have a pension or annuity income. Many retirees choose to continue working on a part-time basis as a way of keeping busy and doing something that is fulfilling. This work can help generate a little extra cash flow to make ends meet.


finance books


  1. Health Care needs

For many people, one of the most expensive parts of retirement is health care expenses. You need to investigate the amount of money you will need for insurance, including supplemental insurance. Any budget should also include additional funding for unexpected medical expenses, which could prove crippling otherwise. In addition, you should think about ways of maintaining your health, such as going to the gym and buying fresh, nutritious foods. Maintaining a healthy lifestyle will help to limit the amount of money spent at hospitals and other care centers. Moreover, it makes sense to think about the possible need for long-term care and how that will impact your budget.


  1. Loss of support

While no one wants to think about losing a spouse or other form of support such as children, creating a plan that covers this possibility is important to do before you retire. Married couples should have a plan in place in the event that either one of them passes away. They should think about whether it makes sense to stay in the same home or to downsize. This question becomes most relevant when income is tied mostly to one person. The surviving spouse should have a sense of security in the event that the unthinkable happens, which means having difficult conversations.


  1. Legacy and estate planning

While the conversation about legacy and estate planning should continue throughout retirement, the initial decisions should be made up front so that everything is worked into the final budget. While some things may change down the line, retirees should have the basic framework figured out before they quit their jobs. An estate plan will help to prevent complications down the road in the event of a sudden loss and ensure that all assets are transitioned easily to a spouse or other loved ones.




  1. Decluttering

When preparing for retirement, the issue of clutter is often overlooked. People tend to accumulate a lot of things during their working lives, and not all of these items will be necessary during retirement. Decluttering makes everything simpler, even if you stay in your home. In some cases, downsizing will force you to declutter, which makes planning even more important. Retirees should think about donating things that they do not need to nearby charitable organizations that can benefit from them or even try to sell off furniture and other stuff in the years leading up to retirement.