What Should I Do 12 Months Before Retirement?
Retirement is an exciting time, but it can also be a bit overwhelming. It’s important to plan ahead and make sure you have your “financial house” in order before you retire. Here are some things to consider doing 12 months before retirement:
1. Create a Retirement Budget
Creating a retirement budget is one of the most important steps you can take when preparing for retirement. This will help you plan for your future expenses and ensure that you have enough money to live comfortably in retirement. Start by calculating your expected income from Social Security, pensions, investments, and other sources. Then, estimate your monthly expenses such as housing, food, transportation, entertainment, medical costs, and more. Once you have an idea of how much money you’ll need each month to cover your expenses, you can start setting aside funds for retirement.
2. Review Your Investments
It’s also important to review your investments 12 months before retirement. Take a look at how your investments are performing and make sure they are still aligned with your goals and risk tolerance. Consider whether it’s time to rebalance or make changes to ensure that your portfolio is on track for retirement success. Additionally, review any tax implications associated with withdrawing funds from certain accounts so that you can plan accordingly when it comes time to start taking distributions in retirement.
3. Maximize Your Retirement Savings
Maximizing your retirement savings is another important step when preparing for retirement. If possible, try to contribute as much as possible into tax-advantaged accounts such as 401(k)s or IRAs during the year leading up to retirement so that you can take full advantage of their tax benefits and to grow your nest egg even further. Additionally, consider taking advantage of catch-up contributions, if available which allow those 50 years or older, to contribute additional funds into your accounts each year beyond the standard contribution limits set by the IRS.
4. Research Health Care Options
Medicare eligibility begins at age 65 so it’s important to research health care options 12 months before retiring so that you know what coverage will be available once retired and how much it will cost each month in premiums and out-of-pocket costs such as deductibles and co-pays. Additionally, consider researching supplemental insurance plans such as Medigap policies which may help cover some of these additional costs associated with Medicare coverage in retirement so that you can make an informed decision about what type of coverage best meets your needs in the future.
By taking these steps 12 months before retiring, you can be better prepared that everything is in order financially when the time comes for you to transition into this new phase of life!