For many people, retirement planning is a rather nebulous concept. They stash money away – sometimes thoughtfully, sometimes without true goals in mind – all with a vague idea that someday they will reach retirement, whatever that might mean.
But just letting retirement happen isn’t wise because, once it sneaks up on you, it’s too late, and you’ll wish you had given it more attention. A lot more.
So, if you are closing in on retirement, here are five things to do before you get there:
1. Envision what retirement is
Perhaps it’s not that surprising that many people arrive at retirement and realize they haven’t given a lot of thought to what they want from it.
If you’re in that situation, try to envision what retirement looks like to you. Write it down and make it as vivid as possible. Putting it on paper helps make it seem more concrete, and it will be easier to turn your dream into reality.
2. Develop a better understanding of your day-to-day expenses
How much do you spend each month? If you’re like a lot of people, you can’t answer that question.
In many homes, people are so accustomed to the regular paycheck coming in that they don’t bother to budget. They just pay the bills and live off what’s left. But retirement comes with too many unknowns to leave expenses to chance that way.
It’s important to understand your overall expenses now, so you can better plan for what’s coming in retirement.
3. Review your assets
Determine what your income sources will be in retirement. Social Security will provide some income, and perhaps you have a pension, though that’s less common with each passing year. But are there other assets you can turn into income?
4. Understand your tax situation
When people think about retirement, they often overlook taxes or misunderstand what their tax situation is likely to be.
The sooner you can sit down with a financial professional who understands taxes, the better.
5. Review the risk in your portfolio
How much risk do you have, and how much risk do you want? Often, when people review their portfolios, they discover they have more risk than they realized, and they shift some of their investments into more stable funds.
If you have done a great job of planning for retirement up until now, it’s possible you can and should reduce the risk in your portfolio. But if your retirement planning failed to measure up, you might need more risk to try to get back on track. Otherwise, you could face another risk – living longer than your money lasts.
Read original article at: 5 Things to Do Before You Retire | Kiplinger