Getting Retirement Ready? 7 Simple Things to Do today.

Key points for things to do to get ready for retirement early:

1. Estimate Expenses – Use the “$1,000-a-Month Rule” to calculate your need.
2. Maximize Savings – Contribute as much as possible to 401(k)s and IRAs.
3. Reduce Debt – Pay down high-interest debt to protect your retirement income.
4. Plan Your Activities – Outline hobbies and social plans to avoid boredom.
5. Anticipate Retirement Stages – Prepare for active, stable, and healthcare-focused phases.
6. Set Up Healthcare Coverage – Supplement Medicare and consider long-term care.
7. Ease Into Retirement – Try a part-time schedule or new routine to adjust smoothly.

As you look forward to retirement, preparing right now can ensure that your next chapter is filled with security, purpose, and joy. Getting retirement-ready doesn’t have to be overwhelming—it is about creating the foundation for a life you can enjoy, where your finances and lifestyle align smoothly with your goals can be attained is possible.

Here, we outline a seven-step checklist to help you prepare to retire confidently. Whether you are years from your target retirement age or planning to retire soon, these steps can help you develop a well-rounded retirement plan.

1. Calculate Your Retirement Budget

The first step in getting retirement ready is clearly understanding your expected finances. Calculating your retirement budget allows you to estimate how much you will need each month and is a crucial step in setting realistic savings goals.

A popular guideline, the “$1,000-a-Month Rule,” suggests that for every $1,000 you expect to spend monthly in retirement, you should aim to have about $240,000 saved. This calculation is based on withdrawing 5% of your savings annually, which is considered sustainable over time.

For example, if you estimate needing $4,000 per month, you will aim to save about $960,000.

You can use this as a starting point but remember to adjust your budget when considering your specific retirement goals. Will you be traveling or helping family members? Factoring in inflation, healthcare costs, and other variable expenses is crucial in your calculation.

Expected income sources examples:

• Social Security benefits
• Retirement Accounts
• Pensions
• Passive income streams

Essential Expenses examples:

• Housing
• Utilities
• Food
• Healthcare
• Travel
• Hobbies

2. Maximize Your Retirement Account Contributions

Are you wondering how to get ready for retirement financially? Maximizing your contributions to your retirement accounts is one of the smartest things you can do. Tax-advantaged accounts, like a 401(k) or IRA, offer you valuable benefits for growing your retirement savings.

By contributing the maximum amount each year, you’re increasing your potential nest egg and reducing your taxable income now.

If you are 50 or older, consider trying catch-up contributions that allow you to add more than the standard limit. This can accelerate your savings, especially if you’re getting ready for retirement in the next few years.

3. Assess and Minimize Debt

Carrying current debt into your retirement can strain your finances, making it essential for you to assess and reduce high-interest debt while still working.

Consider prioritizing debts with the highest interest rates first, like credit card balances, as these can eat into your retirement funds faster than you may anticipate. Even manageable debts, such as a mortgage, are worth considering with your getting-ready-for-retirement checklist.

Paying down debt now can leave you more room in your budget for the things that bring joy to your life later, whether it’s travel, hobbies, or simply enjoying life with more financial freedom.

Prioritize:

• Paying down high-interest debt
• Focus on mortgage and car loans if possible
• Avoid taking on new debt in the years leading to your retirement

4. Future Lifestyle Planning

Once you have a better sense of your financial needs, it’s time to think about what you’ll be doing in retirement.

Lifestyle planning includes deciding where you’d like to live, what activities you want to engage in, and how you will stay socially connected. Retirement is often a time for new adventures or developing new skills, essential in preventing the boredom that some retirees can experience.

List activities or hobbies that excite you to avoid a sense of aimlessness. Consider volunteering, pursuing a part-time job, or learning new skills that can provide structure and meaning. Planning for social connections, like joining community groups or clubs, can also help create a fulfilling retirement lifestyle.

Readying for Retirement:

1. Add up all fixed and variable expenses
2. Consider where you’ll live in retirement
3. Estimate potential costs for healthcare and leisure activities
4. Plan for contingencies, such as unexpected repairs or emergencies

5. Understand the Three Phases of Retirement

Getting retirement ready also means understanding the natural progression of retirement, which is often seen in three distinct phases: early, middle, and late retirement.

• Early Retirement: This phase usually involves more active pursuits, like travel and new hobbies. It’s when retirees spend more freely and enjoy their newfound time.
• Middle Retirement: This phase often involves a slower lifestyle with less travel. Expenses might stabilize or decline as more time is spent at home.
• Late Retirement: Healthcare needs tend to increase in this phase, leading to potentially higher expenses. Planning for long-term care costs is crucial during this stage.

Knowing these getting-ready-for-retirement three phases allows you to anticipate your spending activities and how they change over time, which in turn helps you be better prepared financially and emotionally for these different stages.

6. Planning for Healthcare and Insurance Plan Costs

While Medicare can cover many expenses, it does not cover everything, so planning for your future healthcare is another critical aspect of retirement preparation.

We highly encourage you to explore options for supplemental insurance that can cover gaps in Medicare, such as dental, vision, and hearing expenses. Additionally, long-term care insurance can be worth considering if you want to be prepared for needing assisted living or in-home care later in life.

If you qualify, a proactive way to anticipate future medical costs is to build a health care strategy that includes an HSA (Health Savings Account). An HSA can also be a valuable retirement asset since contributions are tax-deductible, and funds can be tax-free for qualifying medical expenses.

7. Plan Your Transition

The transition to retirement can be one of the most challenging steps in the journey. Many people find that adjusting to new daily structures without the work routine may require more thoughtful planning.

Consider answering the question, “What do you do when getting ready to retire?” and utilize those answers to set up a pre-retirement schedule. A pre-retirement schedule is a fantastic way to test out how you may spend time when officially retired.

You can include things such as practicing a new hobby, visiting friends and family more regularly, or even trying out a part-time job if that aligns with your interests.

Many find that gradually phasing out of work by reducing hours or taking on part-time projects can ease the transition into retirement. This process can also help you adjust emotionally and financially while providing the time you need to solidify a retirement plan that is right for you.

What Can You Do Right Now to Retire Early?

If you dream about retiring earlier than usual, early retirement requires discipline and careful planning. In addition to the steps we’ve gone through above, you will most likely focus on living below your means to increase your savings rate and prioritize investments that grow wealth over time.

Early retirement can become a realistic goal with the correct strategic approach to retirement contributions, debt reduction, and lifestyle budgeting.

Additionally, building up multiple income streams, whether through rental properties, dividends, or side businesses, can accelerate your path to early retirement.

Are You Getting Ready to Retire but Still Unsure? Here’s the Next Step:

Getting retirement ready is far more than just a financial exercise—it’s laying the groundwork for ensuring your future is secure, engaging, and enjoyable. By taking these simple steps today, you can begin to create a more secure, engaging, and enjoyable retirement future—but not everyone may be able to take these steps.

If you still feel overwhelmed and wish to start a personalized plan, contact Dechtman Wealth Management. We would love to help you explore your retirement goals and learn how we can help you achieve the retirement you envision.