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8 money moves to make before you retire

Most of us save for retirement for much of our adult lives. Yet as it gets closer, many of us don’t feel prepared for our post-work chapter.

Because retirement is both a mental and a financial transition, you may want to find a qualified financial advisor to work with. A good one will encourage you to think about your lifestyle—where you want to live, if you’ll need to downsize, how you’ll spend your time. The latter is often overlooked, many FAs report, but it’s no less vital: boredom or depression can set in for those whose only goal is to not work.

The primary benefit of an FA, though, is their practical financial advice that will help you make the most of your money during retirement. Here, eight FA-recommended financial moves to make before you bid farewell to your 9-to-5.

1. Calculate your cashflow and create a budget

Tally your “paycheck replacement sources,” suggests Mark Ziety, a CFP at WisMed Financial in Madison, WI. “Retirement income may be a combination of three categories: steady, such as Social Security, pensions and annuities; variable, including dividends, interest, rental income or maturing bonds; and volatile, such as stocks or stock funds.”

When you choose to file for your Social Security benefits—at age 62, at full retirement age, or at 70—will affect the amount of your monthly check for the rest of your life. Decide carefully.

With most plans retirement plans, you can start taking withdrawals as early as 59½ without a penalty. However, you must take Required Minimum Distributions (RMDs) from your 401(k), IRA, SEP IRA or SIMPLE IRA when you reach age 72. Roth IRAs do not require withdrawals until after the death of the owner. To avoid error, consult your financial advisor, as these rules can be complicated.

Once you’ve ascertained your sources and how much they may yield, “Estimate your cashflow and create a budget for your retirement years,” suggests Dana Menard, a CFP at Twin Cities Wealth Strategies, Inc., in Maple Grove, MN. Menard, like many FAs, recommends living within your “retirement budget” for a while before making the leap, to ensure you’re comfortable with what you’ve allocated.

2. Estimate your lifetime needs

In addition to a monthly or annual budget, you’ll also need to estimate how long you’ll need your assets to last. These days, more people are living into their 90s and beyond, so longevity in your family and the state of your health are important considerations.

Ask your advisor to estimate how much money you’ll need. Or, figure it yourself using a retirement calculator. Most financial services companies provide them on their websites, offering estimates based on various market scenarios.

Will you have a shortfall? Better to know now, so you can think about how to deal with it, perhaps by working longer.

3. Tidy up your balance sheet

Pay down as much debt as you’re able to. “Eliminating your single biggest monthly expense—your mortgage—will give you a lot of freedom in retirement,” says Matthew Benson, a CFP at Sonmore Financial in Chandler, Arizona. “Pay it off, or at least make a dent.”

Yet, David Mendels, CFP at Creative Financial Concepts in New York, NY suggests one needn’t be in a hurry to pay off their mortgage. “It might be nice to not have to make those payments, but it might well be a whole lot nicer to have the cash,” he says.

In either case, reduce your credit card, student loan or personal loan debt as much as possible before you stop working.

4. Review your investments

Are your retirement accounts at one employer or financial institution? If not, then work with your advisor to locate any old plans and roll the funds over directly to a specified 401(k), IRA or Roth IRA account within 60 days to avoid withholding taxes.

If a previous employer has closed, look for plans dating back to 2010 at the

U.S. Department of Labor. You can also search for your money, which may now be categorized as unclaimed property, at databases such as or Both have links to state treasurers, comptrollers and other officials, who update their databases regularly.

Once your accounts are consolidated, your financial advisor can rebalance your portfolio, if needed, and determine if your investment strategy is appropriate for your goals and risk tolerance.

5. Build a cash stash

Just as you need an emergency fund now to cover unexpected expenses and protect your nest egg, the same goes for retirement. Some advisors recommend keeping up to two years of cash to help pay for things in the event the market declines and you don’t want to sell investments, according to Tess Zigo, a CFP at Emerge Wealth Strategies in Palm Harbor, FL.

6. Estimate your taxes

After projecting your retirement income, will your tax bill be higher or lower than it is now? Don’t forget that Social Security benefits are subject to federal taxes, and some states tax them, while others don’t. In addition, you will owe federal and state taxes on any withdrawals from retirement accounts that were funded on a pre-tax basis, such as a 401(k) or an IRA. Contributions to a Roth IRA were made with after-tax income.

7. Plan for healthcare

If you’re determined to retire before 65, when you become eligible for Medicare, you’ll need your own health insurance if you’re not on your spouse’s plan. Once you are eligible for Medicare, know that it doesn’t cover everything and you’ll likely want additional coverage, such as Parts B and D or Medicare Advantage. “Also have a plan for long-term care,” Zigo advises. Someone turning 65 today has an almost 70% chance of needing some type of long-term care services in their remaining years, so it’s important to plan for how you will pay for that support should the need arise.

8. Put other affairs in order

If you pass away or are cognitively incapable of making decisions, it is essential that your affairs are in order. Make sure the beneficiaries of your financial accounts are listed correctly and get an up-to-date will, estate plan and advanced healthcare directive. Designate a personal representative or executor with power of attorney. By doing so, it’s more likely that your wishes will be carried out should the unforeseen occur. Further, you will eliminate any uncertainty that could land your estate in probate for a very long time, causing undue stress on your survivors and potentially eating away at your hard-earned assets.

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