What To Do When Retirement Is a Decade Away
What To Do When Retirement Is a Decade Away
Before you know it, it will be your time to retire! While you are still about a decade away from retiring, you will want to make sure that you are on the right track with your retirement savings. After all, you are on the home stretch. Since you will be on a fixed income in retirement, you want to do everything in your power to save as much money as possible. Continue reading for several tips on what to do when you are only a decade away from retirement!
Analyze Your Current Situation
To be able to reach your savings goal, you need to know how much money you actually need in your retirement savings. Start off by calculating what you have in the bank and how far away you are from your goal. You should also calculate your net worth based on your assets, including cash, physical assets, retirement accounts, and debts, including your mortgage, credit cards, and other loans. Having a clear idea of where you are financially is necessary before moving forward.
Estimate Your Future Expenses and Taxes
Think about what expenses you will continue to have once you reach retirement, from your regular living expenses, medical expenses, and unforeseen expenses. Also think about if there are any lifestyle changes you see in your future, such as traveling. Having a list of your cost projections helps decide on an amount needed for overall retirement savings. You will want to capitalize on the opportunity to forecast your taxes in the time leading up to retirement. By evaluating your options to minimize your tax burden with charitable donations or waiting for tax-free distribution of savings accounts, you can accurately estimate your tax costs.
Reduce Your Debt
If you have high interest debt, you will want to pay it down as soon as possible so you will not have to use your retirement savings to pay it off. The best debts to pay down first are credit card and personal loans. Eliminating these debts will free up more money to allocate towards your retirement savings. After reducing your high interest debt, take a look at your mortgage loan and payments to see if there are any changes you could make to lower it.
Develop Your Retirement Budget
Since you will be living on a fixed income, you will need to spend your money wisely! After going through the past few steps, you are ready to put together a budget for your spending in retirement. Estimate your retirement income based on a 30 year retirement from your 401K, IRAs, pensions, and Social Security payout.
Meet with a Financial Advisor
A financial advisor will be able to analyze your entire financial portfolio to ensure you are on track to reach your retirement savings goal. An advisor will also be able to provide specific advice and tips on how you can improve your financial wellbeing. This professional input will be extremely helpful to put in you in a great position for retirement savings!
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