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Are you ready to retire? The answer to that question depends on when you plan to start your retirement. With this guide, you’ll discover exactly what steps experts say you should take now to secure your financial future, whether your retirement is just around the corner or still a ways off.
- 10 Years From Retirement
If you aren’t already maxing out your retirement vehicles, try to do so now. You won’t get the same benefit you did in your 20s, but 10 years is still a long enough time for money to grow. “This will increase the compounding effect and make a big difference over that time,” says JJ Feldman, portfolio manager of Miracle Mile Advisors in Los Angeles.
“If you don’t have a retirement plan already, now is a good time to start thinking about one,” says Kevin Gallegos, vice president of Phoenix operations with Freedom Financial Network. Gallegos says now is also the time to check in on the health of your investments and pension, if you have one. He recommends getting an up-to-date estimate on what your Social Security income will be, since that will be part of the picture too. You can do that at ssa.gov.
- Five Years From Retirement
Start dialing back the level of risk in your investments, says Feldman. “You may have some time to ride out a market cycle, but you are still close enough to retirement that you should take a fair amount of risk off the table.” Talk to a financial planner or your Athene agent about what your risk should be, and which shorter term, safer investments can still allow your money to grow in those last five years without putting your retirement in peril should markets change.
If you haven’t already purchased long-term care insurance, you should start looking for a plan now, because how you’ll pay for that care will likely be a piece of your financial puzzle. At least 70 percent of people older than age 65 will need long-term care services and support at some point in their lives. Once you decide what plan is best for you, make sure you share this information with whoever will make decisions for you should you become incapacitated, so that he or she knows where to send premium payments to keep you covered (and what your wishes are overall).
- One Year From Retirement
If five years from retirement is the time to dial back risk, one year away is the time to cut it drastically—especially if you’ll be relying on income from your savings instead of a pension, says Feldman. One year out is also the time to zero in on what your retirement lifestyle will be like. Will you work part-time? Do you want to travel? Are you looking forward to pursuing a hobby? The answer to these questions can help you better define your retirement budget. You can also use this year to test-drive what living on your post-retirement income will be like. Gallegos recommends putting any leftover money from your test-drive into your savings, or using it to pay off any debt, particularly credit card debt.