Don't forget to do these five things before you retire

March 4, 2019

By Rodney Brooks at U.S. News & World Report on March 1, 2019

An ongoing complaint from financial planners and accountants is that potential clients seek their services when they are too close to retirement. "People come to visit right when they are retiring, look at a number and see a shortfall," says Joe Edmondson, a financial consultant at AXA Advisors. "They say, 'I wish I had talked to you 15 or 20 years ago.'"

Sometimes, it is too late to help a client retire comfortably at a desired age, and the only option left is to work longer and delay retirement. "When should you start talking about retirement? Yesterday," Edmondson says. "It's always a benefit to fund your retirement plan as soon as possible so you can build up a nice nest egg."

A visit to a financial planner is clearly one thing workers overlook before they retire. But there are a number of other things that people tend to forget to do before retirement, and as a result, may have to suffer the consequences.

Remember to take care of these five things before you retire:

  • Complete home repairs and improvements.
  • Create a realistic budget.
  • Pay off debt.
  • Consider how you will spend your time.
  • Evaluate your health care and insurance needs.

Pursuing these tasks before leaving your job can save you time and money. 

Complete Home Repairs and Improvements

Retiring homeowners aiming to downsize are sometimes devastated to find out they will need to spend thousands of dollars to update their home before they can put it on the market. Many homeowners, especially those who have lived in their homes for 20 years or more, have neglected regular updates to their homes, especially kitchens and bathrooms. Northern Virginia realtor Lisa Bailey-Harper at LBH Group says homebuyers want updated bathrooms and kitchens and new appliances. She has represented clients who had old red or green carpet, mismatched appliances and decades-old kitchen countertops. "A basic thing people don't do is paint," Bailey-Harper says. "Paint goes a long way. You walk around and you don't think it's a major thing until you move something. They are living there and they don't think about upgrading."

Create a Realistic Budget

You don't want to draw too much money in your early years and run out of money. "Most retirees will be on a fixed income, so it is crucial that a budget is created based on income and realistic expenses," says Nasser Zaermohammadi, national training and development director at Vantis Life. "This includes a review of a pension if they have one and Social Security statements to see how much guaranteed income you will be receiving from these sources." Pre-retirees should also assess the value of investments and retirement accounts. "Adjust them for inflation, if necessary, and agree on using an appropriate withdrawal rate – 4 percent is a generally accepted target – from these sources to meet your needs," Zaermohammadi says.

Pay Off Debt

Eliminating debt payments gives you more money to spend on retirement expenses. “If possible, pay off all your debts and do not create new ones," Zaermohammadi says. "An exception to this rule is for people who may want to create certain deductions in retirement to lower their effective tax rates. Keep in mind that most people will be on a fixed income and may not be able to continue paying high interest rates associated with some of these debts."

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