Creating a retirement readiness checklist

The road to retirement can be busy, exciting, and often emotional. Many of us dream and plan for this next chapter, but when it finally arrives, are we ready for a new reality? With a little preparation, achieving a more fulfilling and financially secure retirement is possible where all your hard work comes to fruition. Here’s a retirement readiness checklist to help make the transition to the next stage more successful.

Choosing a retirement timeline

Determining when to retire can be a big decision, so how do you know when the right time should be? Many factors can influence this decision, such as having family members still dependent on a worker’s income, wanting to pay down debt, or when a couple wants to retire together.

A retirement timeline can also be influenced by Social Security eligibility and the age at which you can begin claiming benefits, as well as the age at which you can begin withdrawing from any retirement accounts. Once you reach a certain age, retirees are required to take required minimum distributions (RMDs) from certain qualified retirement savings accounts like 401(k)s and traditional individual retirement accounts (IRAs).

How to know if you’re ready to retire

Often, people are mentally prepared for retirement but may not be financially prepped for the next chapter. Part of choosing a retirement date can include evaluating outstanding debt, retirement accounts, personal savings, and investments to see if there is enough income for the years ahead. To help determine financial readiness, it’s good to calculate expected expenses, including healthcare costs, and compare that number to retirement savings and projected income. To retire confidently, it can be helpful to consider:

•  Retirement goals and aspirations may include traveling, pursuing hobbies, or spending time with family. Ensure a financial plan aligns with these retirement goals.
•  Social and emotional readiness, including social connections, relationships, and support systems. Consider how you’ll stay active and fulfilled in retirement.
•  Physical health and overall well-being are used to determine if one is physically and mentally prepared for retirement, including healthcare needs, insurance coverage, and access to quality healthcare services.

Preparing for retirement checklist

With a retirement date in mind, it’s time to organize things and set up for success. Here are some steps for getting started you may want to consider:

Estimate retirement expenses

This can include planned expenses like utilities, food, transportation, and unexpected costs like rising health care or long-term care. Will certain expenses be eliminated in retirement? Will new ones be introduced?

Evaluate your housing situation

Determine if you want to age in place, downsize your home, or relocate to be closer to family. Moving to a smaller home to reduce living costs may make more financial sense, or perhaps the mortgage is paid off, and staying put is a better choice.

Review financial goals

See if they need to be updated to reflect your future plans. Changes in health, career, family, and the market can all potentially affect financial goals and a retirement plan. Retirement may also introduce new goals like travel, relocation, or funding a grandchild’s education.

Evaluate retirement savings and investments

Estimate how much income will be available once retirement begins. This can include employer-sponsored retirement plans, annuities, pensions, investments, and other savings.

Create a retirement budget

Once income and expenses are estimated to determine ways to cut back spending, identify any gaps, and determine whether certain spending categories will be added or eliminated once retired. A budget is essential to sustaining a retirement lifestyle and ensuring financial goals remain on track.

Prepare emotionally for retirement

Reflect on personal values and goals and thinking about what you want to achieve and experience during retirement. Retiring can sometimes mean letting go of a previous identity tied to a career or earlier life stage, so it can be helpful to explore what interests and activities sound appealing for the future. Perhaps that includes volunteering, learning new skills, or getting more involved in the community.

Talk to a financial professional

Receive guidance before and during this next stage of life. Together, you can ensure there is enough retirement income to sustain your desired lifestyle and potentially discuss supplemental retirement income streams like an annuity.

Update estate planning documents

Such as wills, power of attorney, and healthcare directives, to reflect current wishes. Ensure beneficiaries on retirement accounts, life insurance and other accounts are up to date.

Since each person’s dreams and goals for the future are different, the checklist can be tailored to meet those individual needs. Transitioning to retirement can involve changes in routines, financial requirements, and day-to-day activities. Proactively preparing for these changes can make the adjustment to retired life easier and help you feel more confident that you’re financially and emotionally prepped for the years ahead.

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