You’re close enough to retirement that you’re already imagining days filled with golfing and grandchildren — but you’re not quite there yet. If you have about five more years before you want to retire, don’t assume that you’re done planning. There are several actions you can take now to make sure your transition to retirement goes smoothly, and that your retirement itself is enjoyable and stress-free:
1. Reassess your financial readiness.
You may have been planning this retirement for years, but if anything has negatively affected your nest egg or savings strategy, it’s time to reassess. You need to decide now if you’ll need to work for a few more years past your original target date. Now is a good time to meet with a certified financial planner to determine if you’ll have enough saved to retire. (If you don’t already have one, NAPFA is a great resource.)
2. Look into health care in retirement.
Gone are the days when retirees could count on their company’s medical insurance throughout their golden years. These days, if you retire before you’re eligible for Medicare, you’ll have to go through the private insurance market in order to stay insured — and those prices can be enough to give anyone a heart attack. If you’re retiring before age 65 (when Medicare kicks in), talk to your employer about the possibility of buying into COBRA. While it’s not exactly cheap, you’re getting the advantage of the group rate, which means there are no exclusions and no age-based pricing policies.
3. Consider long-term care insurance.
The cost of long-term care can be staggering, whether you need in-home nursing or residence in a nursing home. While the cost of long-term care insurance goes up as you age — making it less of a no-brainer as you’re nearing retirement — it’s a good idea to look at the numbers and determine if you can fit the premiums into your budget now. Otherwise, you might exhaust your resources on long-term care and have to rely on Medicaid to take care of you.
Whether you’re still chipping away at your mortgage, or have completely paid off your house, now is a good time to start looking into smaller digs. Not only will you be able to tap the equity in your bigger home, but you may also be able to reduce your property tax burden and get settled in the area where you plan to retire.
5. Start the transition between working and retirement.
Retirees who have no particular hobby or retirement job planned are more likely to suffer from depression. It can be difficult to go from working to retired, particularly if you’ve always defined yourself by your profession. A great way to combat this issue is by getting involved in your retirement hobby or job before your last day. Build some relationships within your planned activities before you need them, and you’ll have a better time in the weeks and months that follow the end of your career.
Are you a few years away from retiring? What steps are you taking?
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