Organize your pre-retiree checklist


Like everyone, you want to enjoy a comfortable lifestyle when you retire. But a successful retirement doesn’t just happen – it requires a lot of planning. And that’s why it’s a good idea to draw up a “pre-retiree checklist.”

Such a checklist might look like this:

20 years before retirement: Try to estimate a “price tag” for your retirement, incorporating a variety of factors – where you might live, how much you might travel, what activities you’ll pursue and so on. Then, assess if your retirement savings are on track to help you meet your expected costs. From this point, monitor your progress every year.

15 years before retirement: Although you’re still fairly far away from retirement, you’ll want to bring your goals and challenges into a clearer focus. For starters, try to establish a firmer target goal for the assets you’ll need during retirement. Also, consider your legacy goals, and start developing your estate plans, if you haven’t already done so. You might also explore methods of dealing with potentially enormous long-term care costs, such as an extended stay in a nursing home. Solutions to long-term care may become much more expensive later in life.

10 years before retirement: At this stage, in addition to reviewing your target asset and spending levels, you’ll want to get more precise about how much income you can expect as a retiree, whether through your investments or retirement accounts (such as your 401(k) and IRA), or through some type of part-time work or consulting. Maintaining an adequate income flow is extremely important, because you could spend two or three decades as a retiree, and some of your expenses – health care in particular – will likely rise during the later years. It’s important to plan for health care and long-term care, given the costs and ability to qualify for coverage later in life.

Five years before retirement: Reevaluate your investment mix to help reduce the risk of having your portfolio vulnerable to a market downturn when you plan to retire. Generally speaking, stocks and other growth-oriented investments are more volatile than bonds and other income-producing vehicles. So, you may want to consider shifting some – but certainly not all – of your investment dollars from the “growth” portion of your portfolio to the “income” side.

Two years before retirement: This close to retirement, you’ll want to pay particularly close attention to health-care expenses, so you may want to investigate Medicare supplemental policies. You’ll also want to ensure that you have an adequate emergency fund to cope with unexpected costs, such as major home repairs. In addition, you’ll want to think about whether you should take Social Security right away, or if you can afford to wait until your monthly checks will be bigger.

One year before retirement: Now it’s time for some key decisions: How much can you withdraw each year from your 401(k), IRA and other retirement accounts without running the risk of outliving your money? Have you lined up your health care coverage? And, finally, are you really set on retiring in a year or could you delay retirement to improve your financial picture?

This checklist isn’t exhaustive – but it can give you a good idea of the various issues you’ll need to consider on the long road to retirement. And the sooner you start planning and organizing for that journey, the better.

This article was written by Edward Jones for use by your local Edward Jones financial advisor. Karsten L. Jacobson, CFP®, is a financial advisor for Edward Jones at 2208 Sawgrass Village Drive in Ponte Vedra Beach.