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We want our golden years to be just that, golden! There are a number of financial considerations, but planning for retirement is about more than money. That’s why we put together this Retirement Checklist to make sure you are thinking about your golden years from a holistic perspective. 

1. Stop worrying about when is the right time to retire.

Did you know that the majority of us will not choose when we want to retire? In fact, only about 40% of individuals do. So, if you’re planning to retire at 59 ½ (when you can access IRA money without incurring penalties for doing so), great, but I want to challenge you to change your mindset from retirement begins at 59 ½, 62, or any other set age, to retirement can happen at any point. 

Let me give you a couple of examples of why this is important. While I was at a previous employer the management changed, which brought with it a review and change of the organizational structure. Within the restructuring there were a number of individuals who took “early” retirement (i.e. retirement before they had originally planned). 

I hope this does not happen to you, but some of us might find that we need to retire for health reasons. Just recently an old coworker of mine slipped on ice and badly broke a leg in the process. I’m sure she will need to take leave from work for the short term, because she has a desk job, she will be able to return sooner or later. Other professions, her accident may have had a lot larger repercussions. 

This is why it’s important that we plan for retirement now. This is why it’s important that we are mindful about how we spend our time on the weekends, as this is an indicator of how we will spend our retirement years. Also, by thinking that retirement is in sight sooner than we hoped, it can motivate us to save more for our retirement years. 

2. Build Healthy Relationships for Retirement

During our working years one of our biggest sources of human interaction is with our coworkers. Work meetings end sometimes with discussions about our weekends or our families. We talk over lunch about our latest interests and travel plans. These relationships are important, we are social individuals even if we’re introverts. 

You may or may not continue work friendships into retirement. It’s important, though, to have social interaction when you retire. Recently, Dr. Thia got together with a group of individuals and one individual commented about how the gathering was what they had. It was a statement of fact. It pointed out to Dr. Thia the importance of those driveway get-togethers.

So, during your working years work on building relationships that will transition with you into retirement. You may have lifelong friends, you and your coworkers may have similar interests, or you may realize your neighbors are a great source of fun in your life. If you love golf, find people to golf with regularly during your working years so it’s a habit going into retirement. If you love being artistic (for instance Dr. Thia loves quilting), find others that have interests in the same type of art. 

I feel like now is an important time to say, if there are unhealthy relationships in your life make a change so that your retirement isn’t spent on things that you don’t love. I know one individual who retired and her children simply take advantage of her time. Her children borrow her car regularly and expect that the grandchildren can be at her house whenever needed. While she loves her grandchildren and wants to support her children, she is not choosing how to spend her retirement time; it is being chosen for her. Set boundaries in your working years and reset them in retirement so that you get to enjoy life. 

3. Spend Your Time How You Will in Retirement

I love the concept that how we spend our weekends is how we will spend our retirement years. Do you feel your weekends with fun, meaningful things, or do you just do the monotonous (laundry, grocery shopping, etc.) to get back to the work week? 

We have found that we love our weekends. We have traditions such as our Friday afternoon Teatime. We also have recognized our love for the outdoors and challenging our cooking abilities. 

I think the pandemic is also making us question if we have things to do that fill up our time that add joy. I know for us, we have been able to do a number of house projects that we have truly enjoyed doing. 

These things that are meaningful to us, and bring us joy in our home may be very different than from what you like, but it’s important to lean into our interests. Focus on increasing time spent on your hobbies or focusing more effort on your side hustle as you head towards retirement. 

4. Minimize Debt

As we age our is to increase net worth as we grow wealth and minimize debts. As you near retirement, it is a great idea to carry as little debt as possible. Having few to no debt will give you the freedom to make choices that you might not otherwise be able to make. 

We bought our home a few years ago, and the couple that we bought it from had “owned” the house for 23 years. I use quotes, because they actually didn’t own the house at all – the bank did. They had taken out so many lines of equity on the home that they actually had to pay money to get out of the house. 

During negotiations we were told that they needed to speak with their financial advisor to see if they could even afford to sell it to us. The house had been on the market for over a year, and we learned from neighbors that they couldn’t physically maintain or use the house because the main bedroom was on the second floor. Talk about a retirement predicament to be in – living in a house that doesn’t meet your physical needs and not being able to make a change due to finances. 

If someone told you that you would be forced to retire in a few years, think about the debt you would like to have gone by then and really focus on paying that down (whether you are close to retirement or not). 

5. Prepare for Large Expenses

Just because you retire, doesn’t mean that your home won’t need a new roof or that you’ll never need a new car again. My grandma bought a car when she neared retirement. She thought it would be the last car she ever owned. She bought three more cars, and let me tell you she had those three cars for a long time. It’s a great problem to outlive cars; however, cars are increasingly expensive. 

Putting aside extra money with these big ticket items in mind is a smart financial decision heading into your retirement years. 

6. Increase Your Income Streams

Some people may say that you need to have less income during your retirement years than you do during your working years. I don’t buy that. How many of us want to continue, or increase our amount of travel during retirement? How much more often do we want to pay for green fees at the local golf course. The fun outings we want to do with our grandchildren or our other family members. These things all add up, so reducing the amount of income you need may not be that realistic. 

In your working years, you likely live off of one or two salaries or one salary and income from a side-hustle. However, as you near retirement it is important to think about the income streams that you can benefit from. 

You may continue making money in a hobby or a side-hustle that you do more for enjoyment than the money (but the money is certainly nice, too!). You may have  an employer sponsored retirement account, Social Security (No! Social Security isn’t bankrupt – I’m 34 and it will be around when I retire), state pension, or money from an individual retirement account in which you put money. These are all critical components to planning for retirement. 

It’s important to know what sources of income you can have during retirement. You can’t expect to make money from a side-hustle on day one of retirement if you don’t already have a business in place. Also, there is no money in an individual retirement account if you don’t put money into one. 

Now, I’m not saying to stretch yourself thin and put $20 into an IRA and $20 into an employer sponsored plan. What I am saying is be smart with where you put your money and make sure it is working for you. The earlier you work on different streams of income you’ll carry into your retirement years, the better.

If you’re not taking advantage of an employer retirement match, stop reading this article and go get that match now (it’s like giving yourself a raise without having to ask for a raise- more money for the same amount of work!). 

7. Have a Tax Strategy

Dr. Thia’s Richer Retirement course has a unit that includes lessons on tax strategies for retirement. It’s amazing how many people indicate that they didn’t realize that tax was such an important topic for retirement. Indeed it is.

Not all money is taxed the same way. So, there are ways to minimize your tax liability by being strategic with respect to the money you access during your retirement years (for instance Roth IRAs and Traditional IRAs are taxed differently). Additionally, being smart to not take more money out of retirement accounts than are needed to live (of course, unless a required minimum distribution is greater than what you need). 

Before you enter into retirement you want to think about your tax strategy, know which accounts you are going to access money from first, and minimize your tax liability. Continuing to have your money grow for you through your retirement years can make a financial difference the longer you live. 

8. Ensure You have Health Insurance

Having health insurance is a critical component to having a solid financial plan heading into retirement. Dr. Thia would encourage you to think very carefully about retiring without health insurance. Health care costs with no insurance can add up quickly and eat away at your retirement savings quickly.  If you aren’t in the best of health, they can add up even with insurance.

Prior to retirement, think about your health insurance options and have a plan. You’re eligible for Medicare if you’re age 65 or older or you may be eligible at younger age if you have certain disabilities. While it’s rare, your employer may offer retiree health insurance. Finally, you may need to purchase private health insurance, which can be very costly. However, it’s better to have health insurance coverage than none, even if for a short time. 

If you cannot afford health insurance without maintaining your current job, that may simply be one sign that you are not quite ready to retire. 

In the same reorganization process that I talked about earlier, there was also a retirement program to incentivize certain individuals to retire. We had one individual in our office who qualified for early retirement; however, she was years away from qualifying for Medicare. She knew she could not afford individual health insurance. While I’m sure she would have loved to retire, she made a smart financial decision.

9. Prepare Your Home to Stay in Place or Have Housing Plans 

I mentioned earlier that the previous family that lived in our house needed to move because they were aging and couldn’t manage the steps in our house. At some point that will be us, as well. If one of our family members would become disabled, we would need to make a change in our living circumstance. 

Dr. Thia purchased a home about three years ago. She plans to live in the house a long time. As she and her husband are updating the house cosmetically, they are also being smart to widen doorways, lessen the opportunity for fall hazards, and have purchased a house with a floorplan that they could live on only one floor if needed. Now, hopefully none of those things are a concern for a long time, but it’s easier to build what they may need now than to change the house when it’s been needed. 

So, with these two stories, it’s important to think about how you want to live as you age in retirement. If you want to stay in place as you are nearing retirement, think about how your space needs to be changed to be safer and more friendly if some day you need a walker or a wheelchair. If your home (like ours) wouldn’t work, have plans for the changes you need to make. This way your children don’t have to worry or make tough decisions for you. Be in control of how you want your life to be. 

Set Goals as part of your Retirement Checklist

There was a lot of information in this post! You may have a lot swirling in your head from how you want to start spending more time doing something or a financial thing you feel like now may be the time to address. To help you get what is going on in your mind organized, MPower Co has a Goal Setting Guide that can help you set goals in 30 minutes or less. It will help you find clarity and focus on what you want most as you head towards retirement (whether that be in 2021 or in 2040). Get your free copy of the guide here

MPower Co’s Goal Setting Guide is a free resource that can help you figure out what you want most.

Richer Retirement Course

If you found this article educational and empowering as you look towards retirement and want to do more learning as part of your retirement planning, add MPower’s foundational course Richer Retirement to your retirement checklist! This is MPower’s course for individuals wanting to live a rich life personally and financially starting now and through the retirement years. For more information on the course, visit the course page on our website. 

The only time that Richer REtirement will be offered to the general public in 2021, begins February 2nd. Registration will be open the week prior to the course. If you want to be notified when registration opens email us at info@mpowerco.com or sign up for our Weekly Newsletter and current events here