Things to Do 5 Years Before Retirement
Photo source: Getty Images
If you’re planning to retire within the next five years, you might be facing numerous uncertainties and questions. What if my savings don’t last? Should I explore part-time employment? What if serious medical expenses arise? These and many other concerns may be on your mind.
Before stepping into this new and exciting chapter of life, several things must be put in order first. Here are the top things you need to do to prepare for retirement.
Things to Do 5 Years Before Retirement
Assess the importance of work in retirement
Start by considering whether you plan to continue working in some capacity after retirement. This could be part-time work, consulting, or pursuing a passion project. While having an additional income stream can ease financial pressures and provide structure, it’s important not to make post-retirement work the foundation of your financial plan, as unforeseen circumstances—such as health issues or job market changes—may prevent you from working even if you want to.
Analyse your expenses
Take a close look at your current spending habits to understand where your money goes. This involves reviewing your bank statements and categorising your expenses over the past couple of years. Doing so will help you project your future spending needs and identify areas where you might need to adjust.
Track your retirement needs
Five years before retirement is the perfect time to perform a realistic analysis of your retirement needs. Estimate your annual retirement expenses, taking into account lifestyle changes, healthcare, and inflation. Compare these projected expenses with your expected income from pensions and retirement savings. This analysis will reveal whether you’re on track or if you need to adjust your savings, spending, or retirement timeline.
Plan for your healthcare needs
Evaluate your healthcare coverage and consider whether you need additional insurance, such as long-term care insurance. Healthcare costs can be a major expense in retirement, so understanding your options and planning for potential needs is critical.
Discuss your retirement plans
If you’re married or have a partner, discuss your retirement plans together to ensure you’re aligned on timing, lifestyle, and financial goals. Meet with a financial advisor or attend pre-retirement workshops to review your plan, address any gaps, and make adjustments as needed.
Retirement is not just a financial milestone but also a major lifestyle transition that affects both individuals in a relationship.
Getting Retirement-Ready
The actions and decisions you make today will shape the quality and comfort of your life during your golden years. Getting to know the things to do before retirement can help enhance your financial security and independence in your later years.
