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  • 3-Minute Article
  • |
  • Apr 25, 2018

Ready to Retire? Use the 10-Year Retirement Planning Checklist

Consider these important tasks that can help secure your plan as you approach retirement.

Sitting retired man wearing glasses featured in an article about checklist before retiring

Taking a series of steps in the 10 years before retirement can help protect a plan, create a smoother transition, and achieve the retirement lifestyle you’ve envisioned. Here’s a checklist of tasks to help organize the final stages of planning before a target retirement date:

Review your savings

checkmark Check current balances in retirement accounts and review your savings plan to see if you’re on track to meet retirement goals. According to the Department of Labor, retirees should plan on needing about 80% of their pre-retirement income to cover expenses in retirement.1

For someone with a household income of $125,000 before retirement, that would mean generating roughly $100,000 annually from a range of income sources. A financial professional can help develop a personalized retirement savings target.

checkmark Consider taking advantage of catch-up contributions after age 50. Catch-up contributions of $1,000 annually are available to IRA/Roth IRA holders over age 50, while 401(k) plans allow people over age 50 to contribute an additional $6,000 annually.

Making an additional $6,000/year contribution to a 401(k) can add up to $79,000 in additional savings over 10 years.2

 Build up emergency savings. An emergency fund that covers three to six months of expenses is typically sufficient during working years, but retirees should consider having a bigger cushion – enough to cover 12 months of expenses – in retirement to help prevent large, unexpected expenses from hurting their income strategy. For example, without sufficient savings, a large bill might force a retiree to withdraw more money than expected from an IRA, or tap into an income source earmarked for later in retirement.

Adjust your investment mix

checkmark Meet with your financial professional quarterly to assess your investment mix and discuss potential adjustments. Many people choose to reduce exposure to high-risk stock investments as retirement approaches and put more of their savings into assets considered more stable.

Make a plan to pay off debt

checkmark Develop a strategy to pay off high-interest debt, such as credit cards or car payments, before retirement. Consider whether paying off major debts, such as a mortgage, makes sense for your situation. Reducing debt creates more financial freedom and flexibility in retirement.

Estimate retirement expenses

checkmark Work with your financial professional to create a detailed estimate of projected retirement expenses. For at least one year before retirement, try to live on that budget to see if it’s feasible. Our Future Income Planner can help you create a hypothetical budget.

Examine options to cover medical costs

checkmark Investigate options for supplemental Medicare policies or coverage for long-term care or chronic illness to protect against large medical bills that can deplete retirement savings.

Retiree healthcare expenses are projected to rise on average 5.5% annually for the foreseeable future. That means that a month-long stay in an assisted living facility that costs $8,000 today — the average monthly cost of a private room — would cost more than $13,000 in 10 years.3

Develop a retirement income plan

checkmark Think about how you’ll collect income in retirement. Examine guaranteed sources of income in retirement, such as Social Security and pension payments, as well as potential income from sources like retirement plans and investments. Compare total expected income against estimated expenses. If there is a gap, work with a financial advisor to explore options for guaranteed retirement income, such as annuities.

Review options for Social Security

checkmark Consult with your financial professional to learn how different Social Security claiming strategies could impact your retirement plan and figure out the optimal time to start collecting benefits. For example, the maximum Social Security benefit in 2019 for those who claim at age 62 is $2,209 per month. But the maximum for those who claim at 70 is $3,770.

Develop a plan for enrolling in government benefit programs

checkmark Connect with your financial professional to see what parts of the Medicare health program you automatically qualify for and which parts you want to elect to pay for. Then, ensure you have the correct paperwork to file for them.

Important consideration: It takes three months of lead time to process applications for Social Security and Medicare, so plan accordingly.

The final decade before retirement is an opportunity to strengthen a retirement plan and tie up any remaining details that can help secure your future. Following these steps, and consulting with a financial professional for additional advice, can help you make the most of this time.

Keep track of your progress by downloading this printable checklist to fill out or use with a financial advisor.

Download Checklist

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Annuities can be an essential part of a portfolio that provides a reliable source of income during retirement.

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