Final Countdown to Retirement is Starting

It’s the beginning of the year and I am putting into motion the plans I need to finalize to take the final steps into retirement.  Instead of making New Year’s Resolutions, I am making a checklist of what I want to have done before I retire (hopefully at the end of this year).

#1 Evaluate current debt and expenses.  Prioritize paying off the highest-interest debt first.  Look at any recurring expenses and cancel any subscriptions or services that aren’t being used.  The current plan includes paying off the mortgage near my planned retirement date.  I am also looking to see if there are any big ticket items such a replacing appliances, car repairs, or the roof that will need to be taken care of in the near future.

#2 Estate Planning. I signed up for the Legal Plan offered during benefit enrollment last year.  On the agenda is setting up an estate plan including: Last Will and Testament, Advance Healthcare Directive, Medical Power of Attorney, and a Durable Financial Power of Attorney.  Once I’ve met with the legal representative, I can make further decisions about prepaying for end of life expenses (cremation/burial site).

#3 Simplify financial life.  I started consolidating my retirement accounts into the same financial institution last year.  Not having to keep up with statements from multiple sources for various banking and financial functions is much less stressful.  I am still keeping an account open with a local “brick and mortar” Credit Union for things such as cashing Savings Bonds, a Safe Deposit Box and Notary Services.

#4 Perform complete household Inventory.  Working the way through all of the things that have accumulated over the last 50 years is going to take some time.  I am reading about the Swedish idea of döstädning, which translates to death cleaning.  The gist is to winnow down your possessions to the things that are important to you and that you need so your death isn’t such a burden for those you leave behind.

#5 Retirement Lifestyle Decisions.  How will I define myself or how do I envision my life in retirement?  Retirement is not a permanent vacation.  Having goals and making plans for where to go or what to do will help with the transition into retirement.

#6 Calculate a Retirement Budget. List current expenses and create a budget.  Once you know what your income will be from Social Security and your other retirement income sources, you can create a more realistic expense plan for what you want to do during retirement.

#7 Evaluate Retirement Asset Allocation.  Look at how investments are allocated.  Learning how they perform during various market cycles will help understand your level of risk during a bull or bear market, a market downturn, or recession.  Being too conservatively invested could mean that your investments might reduce your spending power if they can not keep up with inflation.

#8 Have an Income Plan.  Know your retirement income sources and have a plan for how to withdraw the funds.  In general, withdraw funds from taxable accounts first, then 401K/403B, then Traditional IRA funds and Roth accounts last.  Keep up with Required Minimum Distribution (RMD) rules.  As of  January 1, 2023, the RMD age went up from 72 to 73 and will increase to 75 by 2033.  An inherited IRA for non-spouse beneficiaries, must be emptied by the end of the 10th year following the account owner’s death.  If the original owner was taking RMDs before their death, beneficiaries are subject to annual RMDs during the 10 year period to empty the account.

#9 Verify/Confirm Dates.  Check the time-frame to notify your employer of your retirement plans (usually at least a month preferably 3-6 months).  Check with the pension plan administrator for when to file for pension or 401k/403B payments to start.  Apply for Social Security up to 4 months before you want payments to start.  If eligible for Medicare – file for Medicare if terminating a private employer sponsored health plan (Special Enrollment Period).