First Midwest BankFirst Midwest Bank logoArrow DownIcon of an arrow pointing downwardsArrow LeftIcon of an arrow pointing to the leftArrow RightIcon of an arrow pointing to the rightArrow UpIcon of an arrow pointing upwardsBank IconIcon of a bank buildingCheck IconIcon of a bank checkCheckmark IconIcon of a checkmarkCredit-Card IconIcon of a credit-cardFunds IconIcon of hands holding a bag of moneyAlert IconIcon of an exclaimation markIdea IconIcon of a bright light bulbKey IconIcon of a keyLock IconIcon of a padlockMail IconIcon of an envelopeMobile Banking IconIcon of a mobile phone with a dollar sign in a speech bubbleMoney in Home IconIcon of a dollar sign inside of a housePhone IconIcon of a phone handsetPlanning IconIcon of a compassReload IconIcon of two arrows pointing head to tail in a circleSearch IconIcon of a magnifying glassFacebook IconIcon of the Facebook logoLinkedIn IconIcon of the LinkedIn LogoXX Symbol, typically used to close a menu
Smiling woman reviewing papers.jpeg
GET INSIGHTS

Get monthly ideas delivered right to your inbox.

Subscribe for Insights

Uncategorized Dana George July 1, 2024

5 Things to Do as Your Retirement Date Approaches

An estimated 5.6 million Americans retire each year. If you're among those who plan to say goodbye to your career in the next few years, it pays to be prepared. Each step you take to ready your finances for retirement can help you ease into your golden years with fewer concerns about money. Here are five things you can do to make your retirement a little sweeter.

1. Delete debt

It may not be possible to pay off all your debt -- roughly 44% of us carry a mortgage into retirement. But you should rid your life of any debt you can. The first step is to attack high-interest debt, such as credit cards and some personal loans, and work your way down your list of debt. There are several great strategies that can speed the process at which you pay off debt.

The less debt you take into retirement, the further your retirement benefits and savings will stretch.

2. Estimate your retirement expenses

Creating a retirement budget can be tricky because you're not 100% certain how much everything will cost. However, do your best to estimate how much you'll spend each month on everything from utilities to transportation. Don't forget to add in enough money to cover extra expenses, like hobbies and travel.

For soon-to-be retirees, it's easy to overlook taxes when creating a budget. Currently, only 13 states don't tax pensions, 401(k), or IRA distributions. But even if you live in one of the 13 states, you still need to factor federal income taxes into your retirement expenses.

3. Boost your retirement income

Now is a great time to tuck as much into investments as possible. Even if you're only a few years from your expected retirement date, your money will have time to grow. Plus, unless you need the funds from day one of retirement, you have until age 72 (73 if you turned 72 after Dec. 31, 2022) to take required minimum distributions (RMDs).

Now is also a good time to consider what you want to do after retirement. Are you committed to days of leisure, or are you toying with the idea of starting a small business or taking on a part-time job? If so, you can get a jump on it by researching what it takes to start that business or land the part-time job of your dreams. Keeping busy can be good for your mind and personal finances.

4. Save money

Continue to put money into an emergency savings account. The retirement version of this account is a bit different than the pre-retirement version. Before retirement, the rule of thumb is to keep enough money in the account to cover three to six months' worth of bills. In retirement, the goal is to ensure you won't have to depend on retirement distributions to pay bills in years when the stock market is down.

Let's say you retire at age 67, and the stock market tanks during your first year of retirement. Having money set aside to cover expenses means you won't have to pull funds from a retirement account and miss out on the opportunity to boost your portfolio by snapping up bargains.

5. Check your credit score

Your credit score will still be important, even in retirement. After all, you never know when you'll need to borrow money, even if it's only a short-term loan. You can order a copy of your credit reports from Experian, TransUnion, and Equifax through sites like AnnualCreditReport.com.

Carefully examine each line of the reports, making a note of any mistakes you find. The mistakes can be as small as listing the wrong address, to larger errors, like saying you owe money on an old mortgage. If you find a mistake, report it to the applicable credit bureau. Federal law requires credit bureaus to complete an investigation within 30-45 days. If the credit bureau agrees with your findings, it must remove the inaccurate information from your report.

Finally, if the thought of preparing for retirement makes you break out in a cold sweat, don't go it alone. Professional financial advice is available. Thanks to the Biden administration's new Retirement Security Rule, set to take effect Sept. 23, 2024, all advisors who work with retirement savings must now follow a fiduciary standard. In short, they must work for you and not a brokerage. Their goal must be to help you earn money.

You could easily spend one-third of your life in retirement. Why not take steps to make those years more comfortable while you can?

Learn more on how to make the most of your retirement.

This article was written by Dana George from The Motley Fool and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

Subscribe for Insights

Subscribe