Retirement should be like a second childhood … without parental supervision. I believe that’s doable for most people, but it takes planning.
Luckily, you can begin right now by taking the following steps.
Written by Ken Moraif, a senior adviser and certified financial professional at Money Matters, a Dallas-based wealth management and investment firm with over $4.15 billion in AUM and serving over 8,100 households (as of May 31, 2018). He is also the host of the radio show "Money Matters with Ken Moraif," which has offered listeners retirement, investing and personal finance advice since 1996.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
No. 1: Decide where you want to live.
Think about the retirement lifestyle you desire, and find a location that supports it. If you want to travel, you may opt to downsize to a condo. If you want peace and quiet, a small town could be the ticket.
If you want to have more money at your disposal, you might want to move somewhere with lower taxes and a lower cost of living.
Sponsored Content
No. 2: Practice retirement now.
After you retire, you no longer have somewhere to go every day. You’re cut off from your typical social network. It can be a surprisingly difficult time. Try to avoid post-retirement depression by contemplating what you want to do and beginning it now.
Would you like to volunteer for your church? Start now. Interested in teaching for a university? See if you can teach a class now. By practicing your retirement, you can find out what you really want to do (it may not be what you think), and meet new people, too.
Sponsored Content
No. 3: Retire your debt.
I believe that when you are retired, so should your debt be retired. If you have no mortgage, no car payment and no credit card debt, most of your expenses will be variable costs you can control. Wouldn’t that feel great?
Want to begin now? Make a list of all your debts, then rank them by highest interest to lowest. Depending upon the terms and conditions of the loans, it usually makes sense to start paying off the highest interest debt first and work your way down until you have paid off all your debt.
Sponsored Content
No. 4: Reconsider your risk profile.
Once you’re five years away from retirement, I believe you need to adopt a defensive investment philosophy. You may have invested more aggressively while you were growing your money. However, now would be the time to diversify and reduce your risk to help avoid losing a big chunk of your retirement to a bear market.
We recommend and often employ several defensive strategies with our Money Matters clients, such as rebalancing their portfolios quarterly; reducing their exposure to equities; and creating stop-loss strategies to mitigate downside risk.
Sponsored Content
No. 5: Think about health care.
It's an unfortunate fact of life: Health care becomes more critical (and potentially expensive) as we age. Don’t forget to include it in your plans, especially if you want to move or travel extensively.
For example: Medicare may not pay for expenses incurred outside of the United States, so you might consider buying a private insurance policy to fill that gap.
Sponsored Content
No. 6: Make a budget.
How much money will you need to support the lifestyle you want? I suggest you come up with two numbers. The first is the amount you need to cover the things you need, like food, housing and health care. To get your second number, add the costs of the things you want — like travel or a club membership.
Create a financial plan that gives you a high probability of achieving the necessities, and then add the luxuries if possible.
Sponsored Content
No. 7: Apply for Social Security ahead of time.
If you’re waiting until your full retirement age to collect Social Security, it’s recommended that you apply at least three months before you want your benefits to start (you may apply as early as four months before your full retirement date).
Make sure you have all the documentation needed. You can find a list of required documents here.
Sponsored Content
No. 8: Consider rolling over your 401(k).
After years of pumping money into their 401(k)s, workers approaching retirement have some decisions to make. Transferring money out of a 401(k) to an IRA could increase investment options, allow for more flexible estate planning and offer more distribution options.
When making any decision about moving your money, make sure to take into consideration your age, current financial status and costs involved. It may not be the right time for you to roll over your 401(k), but it is the right time for you to study your options.
Sponsored Content
-
-
The Power of Shareholder Proposals
A look at what shareholder proposals are and the power they can have on a company.
-
It’s Not Too Late to Save for Retirement: Five Ways to Step It Up
You’re not alone if you feel like time is running out for you to save, but taking advantage of workplace benefits, increasing the percentage of what you save and more can help.
-
Can Stocks Picked by Artificial Intelligence Beat the Market? 3 Stocks to Watch
stocks An artificial intelligence stock-picking platform identifying high-potential equities has been sharp in the past. Here are three of its top stocks to watch over the next few months.
-
5 Stocks to Sell or Avoid Now
stocks to sell In a difficult market like this, weak positions can get even weaker. Wall Street analysts believe these five stocks should be near the front of your sell list.
-
Best AI Stocks to Buy: Smart Artificial Intelligence Investments
tech stocks AI stocks have been bloodied up in recent months, but the technology's relentlessly growing importance should see the sun shine on them again.
-
9 Best Stocks for Rising Interest Rates
stocks The Federal Reserve has been aggressive in its rate hiking, and it's likely not done yet. Here are nine of the best stocks for rising interest rates.
-
The 5 Safest Vanguard Funds to Own in a Bear Market
recession The safest Vanguard funds can help prepare investors for continued market tumult, but without high fees.
-
9 Best Commodity ETFs to Buy Now
ETFs These commodity ETFs offer investors exposure to the diverse asset class, which is a helpful hedge against inflation.
-
The 5 Best Inflation-Proof Stocks
stocks Higher prices have been a major headache for investors, but these best inflation-proof stocks could help ease the impact.
-
7 Best Small-Cap Stocks to Buy for 2023 and Beyond
small cap stocks Analysts say a tough 2022 has left these small-cap stocks priced for outperformance in the new year and beyond.
