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Retiring Soon? Here’s Some Pointers.

So with workers telecommuting and life throwing all it can at us these days, many out there may be starting to think about simply retiring.  Why go back to work if you have saved a bit and there is the possibility that you can do what you want instead of heading to that 9 to 5. Sustainvest clients come in all ages, but a large amount are newly retired who want to both save the planet and also feel comfortable with how their nest egg is invested. Below is a sort of 5 year game plan to do so:

With 5 Years To Go

Start stashing away cash for one.  If you are going to need to spend money from your 401k’s or IRAs or 403b’s then its time to slowly get that savings account pumped up a little as well.  At the same time, continue to take advantage of your retirement plan.  Employees can max out up to $19,500 each year ($26,000 for those over 50) into their 401k’s, etc. Do this if you can. On top of this, contribute to an IRA. The IRA and 401(k) provide the benefit of tax-deferred savings, unlike a savings account. Depending on your tax situation, you may also be able to receive a tax deduction for the amount you contribute to a 401(k) and IRA each tax year.  And definitely start to think about how much money you may need to live comfortably. Start with a monthly budget and go from there.

With 3 Years to Go

Buy that fancy car you’ve always wanted now.  Major purchases should probably be done prior to walking away from the job just to make it easier to handle then when you may be on a fixed budget.  If you have outstanding loans or mortgages, it may time to cut those down too.  Think about hobbies or even part time work that you may want to do to keep busy as well.

With 2 Years to Go

While those retirement plans get pumped up, try to get a review of your will, power of attorney, beneficiaries for IRAs, etc., and a general estate plan set up.  This way you won’t be scrambling to do it when you want to be sitting on the beach instead.  Also, if you aren’t working with an investment advisor who can put together a financial plan, now may be the time to do so.

With 1 Year to Go

It’s getting closer!  Get a good spreadsheet together of all potential income resources.  This may include pensions, profit sharing, Social Security—even potential part time work or consulting that you may be doing. Decide when you may want to claim Social Security benefits at this time.  Also, figure out how Medicare works and what supplemental plans cover.  Make sure your asset allocation fits your risk profile or have an advisor do this for you.  You don’t want to be overweight in emerging markets and not even know it at this point.  Continue to build those emergency reserves up outside of your funding retirement plans.

With a Few Months to Go

Time to get excited!  Gather all paperwork of any accounts you have out there. along with health savings accounts or health insurance information, etc. Figure out if you have any vacation or sick leave balances and if they can be cashed out.  Be sure you have the information needed for your 401k plan in case you plan to have this rolled over into an IRA.  If you work with a financial planner, now is the time to have them open up a Rollover IRA account to have ready for when you rollover your 401k.

And finally, congrats. Take that big trip you never got to and enjoy the fruits of your labor.