Successful Retirement Countdown: 8 Steps to Success

June 7, 2011 — Feeling nervous about your retirement? You wouldn’t be normal if you weren’t. The good news is that if you take time now to start preparing, most of your anxiety will melt away as you realize your are indeed prepared for your well-deserved retirement.

This article, which was inspired by one in the Wall Street Journal, “Ready to Retire: 5 Year Countdown“, assumes that you have been working for a few years and are at least in your forties. We’ve set up the countdown into various periods, with particular emphasis on your last 5 working years.

R Minus 20. With 20 or more years before retirement you are lucky to…

have so much time. Your primary retirement preparation job in this phase is financial – you need to start (if you are not already!) saving aggressively. If your employer matches your 401k contribution, make sure you put in every bit you are eligible for. Start exploring to find a financial advisor who can help you maximize your possible pre and post tax retirement contributions and investments. There are many different possibilities including Roths, SEPs, IRA’s etc.; a professional can help you here. If you choose not to have a private financial advisor, at least start an account with a major mutual fund company such as Vanguard, Schwab, Fidelity, etc. These companies have many resources and have knowledgeable people to help you.

R Minus 10.
Financial – With 10 years to go to retirement your assets are building up, and you have them allocated wisely for a person who is in the twilight of their working career. This year you and your financial advisor need to have a pow-wow on the viability of your retirement savings vs. your imagined retirement lifestyle. Does it look like you will have enough saved – or are you going to have to plan on working longer and/or start saving a lot more? What is your target “number”, the amount of all your resources (investments and retirement funds) that together with your pensions, social security payment will cover your expected retirement lifestyle. Should you convert your IRA into a Roth, or start a new Roth (basically, pay taxes now but not worry about having to pay taxes on it later)?

Lifestyle – Have you been thinking about where you might live once you retire? The period 10 years before retirement is a great time to checking out possible retirement regions, towns, and lifestyles. You can read about many places online and in books. You can talk about it with people you know. And if you find yourself on a business or pleasure trip, taking a few hours to poke around, or even tacking on a weekend to visit some likely areas will be a good investment. During one of these trips, I stumbled upon a resort town that featured several live Casinos, adding a vibrant atmosphere that appealed to both tourists and retirees looking for entertainment options. With several years to go, you will be assembling a sizable data bank of places that you might consider living in (take notes). This phase will help you with the next important step.

R Minus 5. In our experience the happiest retirees are the ones who planned for it. So now it’s time to really get serious. Start discussing and drafting your retirement priorities with your significant other. You have plenty of time to change them, so don’t worry if they are not perfect. But the very act of writing your likes, dislikes, and goals down will help give you focus.

Here are some of the the considerations that should be in your priority list:
– Temperature and climate (minimum and maximum temperatures, humidity, other weather)
– Region
– Environment (beach, mountains, college town, urban, coastal, desert)
– Lifestyle (golf, boating, travel, culture, etc.)
– Economics (cost of living, taxes, jobs etc.)
– Proximity of relatives and friends
– Full or part-time residence (will you be a snowbird, live part of the time to your vacation home, etc.)

In the meantime keep up your traveling and thinking about retirement. Most importantly, are your savings still adding up to your “number”? If not, you need to get to work on Plan B. One last, and very important task, remains: if you are fortunate enough to have a significant other, it’s time that the 2 of you have a heart to heart about your retirement priorities – how do they match up, and where might compromises have to be made?

R Minus 4. During this year you should continue to work on honing all your R minus 5 assignments. But if you haven’t done it already, this year has a new task. That one is to develop your “what I’m going to do in retirement” draft. Have you got a hobby or a new business that you want to pursue in retirement? This is a great time to start exploring that idea. If you don’t have a hobby, give some serious thought to what you are going to do all day with your new freedom.

R Minus 3. Continue with all of the above. If you haven’t done it yet, this might be the time to take your vacation in an area where you might consider retiring. At the minimum try to visit a few neighboring towns or communities.

R Minus 2. Unless you are very well off financially, you should spend some time thinking about beginning the downsizing process. Your big home is just going to cost you a lot of unnecessary money, so you might think about moving to a new home that’s easier to take care of and costs you less in energy and taxes. That applies especially if you have decided to remain in the area where you live now.

R Minus 1. If you are thinking about moving far to a new state, travel should be the focus this year. You might take a few “Stay and Play”/”Discover” packages where you can experience a 55+ community first hand, and at a discount. You might also explore renting a place in a community for the season coming up. Good places in desirable communities fill up fast, so don’t wait until the day you retire to make a reservation. Make a last check of your finances and priorities, and get ready for retirement.

Blastoff! Enjoy your retirement. Don’t make the mistake of buying something on a whim – keep your powder dry until you are sure. And if you make some choices that don’t turn out as expected, don’t be afraid to regroup and try again.

More…
Quiz: How Ready for Retirement Are You?
Baby Boomer’s Guide to Selecting a Retirement Community

Comments: What is in your retirement countdown plan. We would love to know how you are preparing for a happy retirement. Please share your thoughts in the Comments section below.