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    5, 4, 3, 2 … Your Retirement Countdown Checklist

    April 26, 2019

    When you think back to when you first began working, didn’t retirement seem like it was a lifetime away?

    Yet, here you are.

    Every decision you’ve made throughout your life has led you here.

    We want to make sure retirement is everything you deserve.

    Here are our recommendations for what you should be doing when you’re five years, three years, and, eventually, just one year from retirement.

    Let the countdown begin.

    Five years to go

    If you’re five years from retirement, it might feel as if you have some breathing room.

    But don’t be complacent.

    The next five years will fly by.

    Use this time to your advantage, and to see where things stand. What are you doing well? Do you need a course-correction?

    At the five-year mark, we suggest you review the following:

    • Your monthly expenses.

    Evaluate your spending habits. How might your cash outflow shift once you retire?

    • Your debt.

    In most cases, we recommend you retire debt-free (this includes your mortgage). If you have credit card debt, pay off the cards with the highest interest rates first.

    • Social Security.

    Everyone’s Social Security claiming ‘sweet spot’ is unique. Learn the basics now so you can make an informed decision down the line.

    • Your potential healthcare expenses.

    The average couple retiring today will spend about $280,000 on out-of-pocket healthcare-related expenses.1 Are you funding a Health Savings Account (HSA) to help cover these costs?

    • Your long-term care needs.

    Medicare doesn’t cover long-term care, which is care that helps you with your day-to-day needs. Because some people can “self-insure,” not everyone needs a policy. Speak with your advisor so you can evaluate which decision is best for you. 

    Three years to go

    Now that you’re inching closer, you can really start digging into some of the numbers.

    But we also like to remind pre-retirees that retirement isn’t just about money. You need to start thinking about how to stay healthy and how you’ll live your day-to-day life.

    At the three-year, pre-retirement stage, make the following points a priority:

    • Think about tax planning.

    Forward-thinking tax planning can save you tens of thousands of dollars. Are all your retirement savings in a tax-deferred account, such as a 401(k)? Now’s the time to decide whether putting your money in an account with a different tax structure (such as a Roth IRA) makes sense for you.

    • Evaluate your healthcare options.

    If you’re retiring at age 65, review your Medicare options and potential costs. If you’ll be retiring before age 65, figure out what you’ll do until you’re Medicare eligible.

    • Update your beneficiaries.

    This is important: The beneficiary designations on your retirement accounts supersede anything in your will. It only takes a few minutes to update these, and it could save your heirs a lot of heartache.

    • Little things can keep you mentally and physically healthier longer.

    The #1 factor of a happy retirement is health and wellness. If you start doing mental and physical exercises right now, they’ll be routine once you retire.

    One year to go

    Retirement is right around the corner.

    This is when you need to ramp up your decision making. It’s time to:

    • Assess your investment mix.

    Evaluate your risk exposure. Everyone is unique, but at this point in the process, your stocks, bonds and other investments should probably be allocated for capital preservation. 

    • Explore tax strategies:

    Depending on your current tax bracket (versus what it will be during retirement), it could make sense to convert a traditional IRA (a tax-deferred account) into a Roth IRA (an account that grows tax-free).

    • Finalize your Social Security strategy.

    There are nine different paths for single people to claim Social Security, and 81 if you’re married. There are also numerous claiming decisions to make if you’re divorced, widowed, or disabled.

    • Decide how you’ll spend your time.

    In just 365 days, your current daily routine will change. What will you do instead? Consider the things you’ve always wanted to do, like going back to school, taking up a new hobby, or starting a new company, and begin planning for them now.

    You get one chance to retire “right.” Every choice you make leading up to retirement will impact you for decades to come.

    While the suggestions we’ve made here are good starting points, they’re just the tip of the iceberg. See our detailed retirement checklist for additional information.
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