6 Financial Things to Do If You’re Nearing Retirement

Did you ever think that your retirement age would be so close? It’s something you planned for, yet now that it’s quickly approaching, you’re not sure if you’re ready. There’s a lot to consider before you retire — like Social Security payments, medical costs, and housing expenses. And what about vacations and enjoying life? Those are in there too.

You’ve been stashing away your hard-earned cash into retirement accounts like 401(k)s or even a pension plan. But is it enough? If you’re unsure, have a look at some key steps you can take to stabilize your financial footing as you approach retirement.

1. Start by Assessing Your Retirement Savings

A great place to start with any planning or strategy session is at the beginning. Where do you currently stand?

Review your retirement accounts, such as 401(k), IRAs, and pension plans, to determine if you’ve saved enough to maintain your desired lifestyle in retirement. Many financial investment firms have financial calculators to help you calculate your target savings and consider whether you’ve saved enough to maintain the same lifestyle in retirement that you currently enjoy. With a bit of research, you can gain a pretty good idea of where you now stand and use that to plan out your next few years.

If you’re behind in savings, you can create a plan to address it. That may include going for that promotion at work or continuing to work for a few more years to reach your goals. Consider working with an advisor to help you see the bigger picture with your financial strategy and the ways you’ll see it through.

2. Spend Time Understanding and Maximizing Social Security Benefits

Sometimes it doesn’t take more than a few minutes to look into your Social Security benefits to come up with more questions than answers. Should you retire at 68 or hold out until you’re 70? Considering your monthly check grows by 8% each year up until the full retirement age, it might be worth the wait.

But there are many things to consider when calculating what’s right for you. Do you need the money early to cover things like food or rent? Are you married, and if you are, do you coordinate your benefits with your spouse?

There isn’t a one-size-fits-all answer to Social Security benefits. Yes, some of this process involves guessing at your future plans. But much of it starts with taking a deep dive into your current financial solvency and understanding where the sweet spot lies in choosing when to begin collecting your benefits.

Delaying your Social Security claim can result in higher monthly payments, and timing can make a significant difference in your retirement income. This isn’t something you should evaluate on your own. With many financial planners specializing in Social Security benefits, it’s a good idea to seek out help early to find the plan that works best for you.

3. Diversify Your Investments

What worked in your twenties won’t work as you approach retirement. While you could be more aggressive with your investment choices early in your career, doing so now could be detrimental to your retirement.

Review your investment portfolio and consider adjusting your asset allocation to be more conservative as you approach retirement. Reducing exposure to high-risk assets can help protect your savings from market volatility. If you’ve always been active in high-risk investments, now may be the time to lower your risk threshold. Consider safer financial tools like municipal bonds and annuities for more thorough coverage and lower risk.

4. Build an Emergency Fund

Many of us start retirement with ideas of taking vacations and pursuing our passions. But the inevitable can also include higher medical expenses and unexpected events — who could have planned for a pandemic?

Life happens whether you’re retired or not. Your house may need a new roof. You might have to take an unexpected flight to care for an ailing relative. Your medical expenses may increase beyond what you anticipated.

You’ve likely learned about the importance of emergency funds throughout the years, and that won’t change in retirement. If anything, it may become more crucial to stay on track by building an emergency fund alongside your retirement savings. Aim to have three to six months’ worth of living expenses set aside in a liquid, accessible account.

5. Review Your Insurance Coverage

Insurance is a big part of our lives these days. While you might have once assessed your policies to cover your children and your home, now it’s equally important to try to safeguard against unpredictable events in retirement. Assess your insurance needs, including health, life, and long-term care insurance.

Remember that this is a time for learning. Consider attending a financial course or reaching out to retirement experts. With so many policies available, it can benefit you to explore what’s available. Things like long-term care insurance can be the protection you need that’ll allow you to live life on your own terms.

6. Plan for Estate and Legacy Goals

We all hope to have enough financial stability to live on our terms. But what happens to your financial accounts after you’re gone? If you’ve never looked at estate planning, now is the time to start. This may include creating a will, setting up trusts, and designating beneficiaries for your retirement accounts.

If leaving a legacy or supporting charitable causes is important to you, you can also develop a strategy for your estate to ensure your assets are distributed according to your wishes. Set up correctly, it’s a great way to minimize tax implications.

After working hard to build up your wealth, it’s time to live retirement your way. Above all, take the time now to look at your savings and plan for the future. It’s a great way to ensure a long, happy retirement.