3 Things To Do For Those Within 3 Years of Retirement

After decades of working and saving, pulling the trigger on retirement can be a scary thought for some. You want to make sure you are ready, not only financially but mentally and emotionally. With that in mind, the following are three things to address in the few years before retirement to help with the timing decision and transition.  

1)    In most cases, the number one financial thing you can do to prepare for retirement is to determine how much you currently spend each year. Since most people do not materially alter their lifestyle after retirement, knowing how much you are spending now is a good indicator of how much you will need in retirement. The best way to do this is to track your spending for the two-to-three years prior to retirement, which can be done with a budgeting app, spreadsheet or even a pencil and paper. If the thought of tracking your spending is too much, consider looking at your take-home pay and backing out how much of that you sent to your savings or investment accounts…anything not saved was likely spent. Regardless of how you do it, knowing how much you spend can help you feel confident in the timing of your retirement.

 2)    For many of us, work is part of our identity and can feel like our purpose in life, so when the work stops, we can feel a bit lost. In the year or two leading to retirement, it is important to start coming to terms with the upcoming change. Thinking about this in advance can help the transition since it gives you time to work through your emotions and start to look forward to new opportunities.  

 3)    Make a plan for how you will spend your days, perhaps even come up with a daily or weekly schedule. Will you start volunteering or step up your current volunteer hours each month? Or perhaps you will get a part-time job to get out of the house and earn a little extra money. Maybe, like me, you plan to get more serious about your pickleball game. Regardless, having an idea of what you will do each day can help with the transition since social interactions, which often come from work colleagues during your working years, can be important for mental and physical well-being. 

Retirement planning is unique to each person, as is the transition into retirement, but these tips can help most prepare for this long-awaited time. Happy retirement!

- Juli Erhart-Graves, CFP®, Worley Erhart-Graves Financial Advisors