1. Establish Your Monthly Budget. Include all expenses including gifts, vacations, taxes, cars, and emergencies.
- Accumulate 12 months of cash to cover monthly expenses. You never now what may come up (job loss, major house repair, medical problem). You want to have a cushion built up so if something bad happens you are prepared to deal with it financially.
- Buy Long Term Care Insurance. Middle age can be the best time to buy because you have the highest likelihood of being eligible for the policy and the premiums can be much lower than if you wait until you are in your 70’s or 80’s.
- Predict the Cost of Health Care. As everyone knows, health care costs are rising faster than inflation. In 2008, health care costs rose 1.6% faster than consumer inflation.* Since 1970, health care costs have risen about 2.4% faster than GDP.
- Refinance Your Mortgage. Most people in retirement cannot borrow money from in traditional forms. Especially now with new mortgage standards, it will be harder to finance major purchases without a job.
- Determine Your Sources of Income. Make sure you and financial advisor know exactly how much and where all of your dividends, interest, and other income will originate.
- Revise Your Investment Allocation/Strategy. What you did to accumulate your wealth while working will be different from how you spend it in retirement. You will need to adjust your investments to have less risk, more income, and be liquid.
- Review Your Will and Trusts. These documents are very important because they can protect you and your assets so that you can leave a legacy behind. Get all beneficiaries up to date and make sure all documents reflect your wishes.
- Set a Plan for Your Time. How will you spend your days? How often will you do your hobbies? Will this make you fulfilled or will you get bored after a month? Your kids may enjoy your company but not everynight.
- Make Sure You Really Want to Retire. Just because you are 65 does not mean you have to retire. Many people are taking on new challenges whether they be with the same company, a new company, or going back to school. Consider part time work to keep your mind fresh and some extra income coming in.
Retirement should be an enjoyable time where you get to do what you want, when you want. By evaluating and planning now, you can make “retirement” the best 30+ years of your life.
*http://www.healthinflation.com/