Are you looking ahead to retirement? To relaxing and doing all those things you don’t have time to do now? In retirement, you will have lots more time to do what you love and hopefully less expenses; but you will also have less income.
Plan ahead! When you are ready to retire, you want your finances to be ready, too. You have saved for retirement in your 401(k) plan, you have a pension if you retire from the Fed. And that’s all great! But what about your debts and expenses? The number of seniors retiring with debt is growing, and it’s best to be well prepared.
When you are 5 years from your planned retirement, ask yourself these questions:
- Do you have credit card debt? If so, stop using the cards and convert that debt to a lower interest personal loan to try to pay it off within 3 to 5 years before you retire.
- Do you have a car loan? When will it be paid off and when do you think you will need a new car? Plan to enter retirement with a reliable, fully paid off vehicle. And if you have more than one car, sell one of them.
- Are you still supporting your adult children? Have a heart-to-heart talk. They need to get on their own two financial feet before you retire. Map that out with them so that your support of them winds down before you retire. Be sure to track it, too! Taper those payments down. Many seniors have student loans for their grown children. Work with them and a reputable lender to transfer what you can over to your children.
- Do any of your dependents have special needs? If so, be sure to talk to a lawyer about their future. This is very important!
- Do you have a mortgage? Should you refinance? Should you downsize? Mortgage debt is okay if you can afford it and it’s the right house for you. However, don’t make sudden moves if you can help it. Many seniors move somewhere they thought they wanted to live and then regret it…
Those 5 years will fly by, and before you know it, you will be firing up that margarita machine and enjoying retirement!