If you’re retiring in ten years or less, you need to have enough money – and these 10 tips will get you there.
Before the tips, a quip:
“The best time to plant a tree was 20 years ago. The second best time is now.” ~ Chinese saying.
Don’t worry if you didn’t start planning for your retirement 20 years ago…you have time to get started on it now! For more retirement tips, read The Complete Idiot’s Guide to Retirement Planning. And, read on to learn how to ensure you have enough money to retire…
How to Get Enough Money to Retire in 10 Years
1. Ten years before you retire: put your affairs in order. Carefully evaluate your assets and debts. Consult a financial planner, or at least an online retirement calculator, to determine how much money you need for retirement. Have you saved enough? Do you have excessive debt? Compare where you are with where you need to be.
If you don’t think you’ll be financially ready to retire in ten years, read 8 Tips for Increasing Your Retirement Income.
2. Nine years before you retire: make sure disability insurance is in place to protect income during your working years. Most employers provide this coverage, or individuals can secure their own insurance until retirement age.
3. Eight years before you retire: pay off your home mortgage. A mortgage-free home can be a tremendous asset for retirement: It eliminates the need for a housing payment, and, for some individuals, can provide a resource for cash flow through a reverse mortgage. Plan to accelerate paying off a mortgage, if possible, by applying any available funds to the principal.
4. Seven years before you retire: focus on building a financial cushion, including fully funding retirement plans. All Americans can contribute up to $16,500 annually to employer-sponsored, tax-deferred 401(k) retirement plans. Individuals over age 50 can save $5,500 more in “catch-up” contributions. Those without an available 401(k) plan can save $5,000 per year in an IRA (individual retirement account), or $6,000 for people over age 50. Also, build an emergency fund of six months’ expenses in an accessible account.
5. Six years before you retire: consider purchasing long-term-care insurance coverage. This insurance covers expenses, at home or in a care facility, that are not covered by health insurance or Medicare. Consult a financial planner or do research to find the right policy.
6. Five years before you retire: fully understand your retirement income options. Get a current estimate of anticipated Social Security income at Social Security Benefit Calculators. Check with your employer’s human resources department to be sure you clearly understand your pension, if any. Review all investments, including pensions from former employers.
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7. Four years before you retire: pay off all your debts, including credit card debt. To ensure you have enough money in retirement, pay off your consumer debt, personal loans, educational loans and car loans.
8. Three years before you retire: evaluate your life insurance needs. Often, a large life insurance policy is no longer necessary for retirees who are not supporting dependents. Read 3 Tips for Buying Life Insurance for more info.
9. Two years before you retire: plan your retirement lifestyle. Will you work part-time, travel or pursue a hobby? Create a retirement budget. Begin living on your anticipated post-retirement income. A good starting rule of thumb is 75 percent to 85 percent of current income. Save remaining income or use it to finish paying off debt.
10. One year before you retire: apply for Medicare. Recipients must sign up for Medicare as close to their 65th birthday as possible. The Social Security Administration recommends applying for Medicare three months before turning 65, as some benefits decrease if the coverage is not selected as early as possible.
“Remember that these assigned years and action items are simply guidelines,” says Ewing. “Each task, however, is an important step along the road to retirement. By following this road map, you can plan for your own financial security, no matter what the future holds.”
If you’re not strong on finances, read Why Are Women Bad With Money? 7 Money Mistakes Women Make.
If you have any thoughts about retiring in ten years or less, please comment below…