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The ABCs of a Happy Retirement

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Whether you’re retiring tomorrow or in 10 years, it’s time get on the right track for a happy retirement. If you retire at age 65, you’ll join the 46.3 million retirees receiving Social Security benefits. And the number of retirees is poised to grow even larger, so you’ll have plenty of company in your golden years.

Retirement planning is not something you can put off until it happens. Regardless of your current age, start using these ABCs now to make your retirement wishes come true.

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A = Accountability

Start retirement planning early and be realistic about how much of your current income you’ll need to replace during retirement. If you earned $150,000 when you were working, you might need to come up only with $67,000 in retirement because you’ll have your Social Security income — and reduced expenses.

Additionally, if you expect to receive any pensions, you’ll need to fund fewer of your retirement costs. Be accountable to yourself now and take time to review your current financial status to increase the likelihood of a sweet retirement.

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B = Budgeting

Start planning now and formulating your retirement budget will be a snap. When you’re saving for retirement, work backward.

Use a retirement calculator to figure out how much money you should save each month to reach your retirement goal. Automatically transfer that amount into your 401k, Roth IRA or brokerage account and you’re free to spend the rest — assuming you’ve already set up an emergency fund.

You might also consider using one of the many online apps or calculators to help you with retirement planning. OnTrajectory does a good job of incorporating current and future budgeting with retirement planning. Other good retirement apps include Mint, RetirePlan, Vanguard and Retirement Outlook Estimator.

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C = Calculating

Calculate your retirement planning needs. The AARP has a great tool to help you figure out how much you need to save. All you need to do is answer a few simple questions and you’ll get an estimate of how much you’ll need to retire.

You’ll find scores of online calculators to help you with your retirement planning. Fidelity, Vanguard, Edward Jones and Schwab offer retirement calculator tools, to name just a few.

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D = Downsizing

Consider downsizing your lifestyle — and spending habits — even before you retire. Getting rid of unwanted stuff — and even more dramatic steps like moving to a smaller home or giving up an automobile — will not only save you a money, it might make you happier, too.

And, if the kids are out of the house, you might want to downsize sooner instead of later. Having less home to take care of frees up money for other activities. In addition, by downsizing you’ll have more time — you won’t have to maintain a large property — and lower utility bills. A side benefit: You’ll consume less because if you don’t have space to keep things you’ll be less likely to buy them.

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E = Equity

Equity is the portion of your home that you own. So, when you pay off that mortgage, you own your entire home, which could serve as a valuable retirement vehicle.

You might be wondering if you should tap into your home equity with a reverse mortgage to finance your retirement. Reverse mortgages have become more transparent, with better products and lower fees. If you’re retired and own a home, consider a reverse mortgage, but make sure you read the fine print, go with a reputable company and choose a low-fee provider.

Learn: How Does a Reverse Mortgage Work?

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F = Freebies

Senior discounts are no longer a laughing matter once you’re old enough to qualify for them. With available discounts from a lifetime pass for $80 to all National Park properties to a free doughnut when you buy a large or extra-large drink at Dunkin’ Donuts with an AARP card, getting older has its benefits. And, in many cases, these retirement benefits kick in at age 60.

Don’t be afraid to ask if your favorite places offer senior discounts — many aren’t even advertised. And if you’re an AAA member, check the list of discounts you can get with your card and make sure you use them.

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G = Goals

Set goals before you retire. Of course, you’ll need financial goals but don’t forget your personal goals. Create your own retirement structure and prioritize your most important goals.

If early retirement is in your future, then start planning early. You probably spend plenty of time planning for a vacation, so carve out a few hours to figure out how you want your retirement to look.

Related: 30 Ways to Retire Earlier

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H = Healthcare

Plan for a 6.5 percent annual increase in healthcare costs in retirement. With healthcare changing under the current administration, make sure you keep informed. Knowledge is your financial friend today when you’re planning for tomorrow.

Don’t forget to exercise, get plenty of rest and eat healthy, to maintain good health. Exercise, get plenty of rest and eat well to maintain your health. If you’re wondering how to retire happy, try something as simple as walking every day for a start.

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I = Invest

It’s crucial you invest in a portfolio of diversified stocks and bonds for retirement. And make sure your future investment return calculations are reasonable — despite historical stock market returns lately, experts say you shouldn’t count on higher than a 4 percent return going forward. You might want to consider investing in the stock market during retirement to ensure your nest egg keeps up with inflation.

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J = J Retirement Insurance

A 702(J) plan is a type of life insurance policy. Consult your investment professional to find out if this whole life insurance policy, which features a death benefit, is the right product for your financial situation. Keep in mind that some insurance helps pay for estate taxes, too.

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K = Knowledge

The greatest asset you can have when it comes to preparing for and enjoying a happy retirement is knowledge — and getting educated about retiring doesn’t need to cost a lot. Visit the AARP website for retirement planning and lifestyle advice or borrow all the retirement-related books you could possibly read at your local library. With the multitudes of baby boomers retiring, many investment websites have stepped up by providing excellent retirement resources.

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L = Long-Term Care

An important part of retirement planning is deciding on contingency plans in case you can’t care for yourself. Purchasing long-term care insurance is an option but it can be expensive — and although the insurance won’t likely cover 100 percent of your nursing or in-home care costs, it will certainly offset them. When searching for long-term care solutions, take your time, talk to your friends and prepare before you need it.

Explore: The Average Cost of Senior Care in Every State

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M = Medicare

Most Americans are eligible to receive Medicare health coverage when they reach age 65, which covers many — but not all — of your healthcare expenses at a relatively inexpensive cost. Visit the Medicare website for a helpful explanation of benefits and plans.

Make sure to sign up for Medicare before you turn 65 to avoid penalties and coverage gaps. And check out supplemental healthcare plans to cover the costs Medicare doesn’t.

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N = Nontraditional

Shake things up in retirement and try something totally new and different. Turn that hobby you love into a small business or reduce your housing costs and expand your social life by inviting like-minded friends to move in with you.

Once you retire you can do what you want, including moving to another country. And just so you know, there’s no maximum age for serving as a Peace Corps volunteer.

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O = Off-Season Savings

The flexible schedule you’re likely to enjoy in retirement allows you to take advantage of many off-season and last-minute travel bargains. Visit websites like Kayak or Expedia and search for bargain travel destinations worldwide. Go off-season — there are major financial perks and it’s more relaxing to see the world without the crowds.

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P = Plan

Plan for a long life. Calculate your retirement planning estimates conservatively.

The average lifespan continues to increase. If you’re age 65 today, there’s a 75 percent chance you and your spouse will be around at age 85, according to a JP Morgan report. And, there’s a 48 percent chance you and your partner will celebrate age 90 together. Make sure you have a plan in place should that happen.

Find Out: Here’s How Much It Will Cost You to Live to 100

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Q = Quality of Life

Retiring happy goes beyond money and things. Focus on what you can control in retirement and create a good quality of life by maintaining friendships and practicing smart health habits.

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R = Relocating

Whether it’s just a move across town to a smaller living space or relocating halfway around the world to a country with a more affordable cost of living, relocating can be rewarding and cost-effective. The best states to retire in have low taxes and access to healthcare and activities. U.S. states like Florida and Georgia have lower taxes and warm weather. If you like the Wild West, Wyoming and Colorado offer friendly tax policies.

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S = Social Security

Getting to know how Social Security works and becoming familiar with the benefits you’re entitled to is something you should do now, no matter what your age. Visit the SSA website for a wealth of information and a tool to help you calculate your estimated monthly benefits. Remember, the longer you can delay taking your Social Security benefits – until you turn 70 and you no longer get a larger benefit by delaying — the larger your benefit check.

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T = Taxes

To lower your taxes in retirement you might need to bone up on your tax planning knowledge. Visit the Fidelity website for an explanation of how to withdraw funds from your taxable and nontaxable accounts to keep the taxman at bay. Just remember you must begin required minimum distributions from your traditional IRA at age 70.5.

Search For: Hidden Tax Breaks for Retirees

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U = Unwanted Stuff

There’s no time like the present to get rid of unwanted stuff by selling it to fund your retirement savings accounts or donating it to a worthy charity. Purging, selling and donating things you don’t use makes you feel better and helps others. Plus, it’s an easy way to make some extra money.

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V = Volunteer

If you have more time than money when you retire, volunteering can help you fill your time and support a worthy cause. And some volunteer opportunities — like ushering for a local theater company — come with enjoyable perks. Choose a volunteer activity in-line with your interests and have fun while you give back.

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W = Work Part-Time

Many retirees choose to work part-time during retirement, both to fill time and generate additional income. With the new gig economy, it’s easy to boost your bottom line by signing up to drive for Uber or work with Task Rabbit. Under current Social Security rules, you can earn up to $44,880 per year without any reduction in your monthly benefits.

Here Are: Senior-Friendly Jobs That Are Perfect for Retirement

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X = (Gen) X

Gen X people are hitting middle age but they still have plenty of time to plan, save and invest for their golden years. Start by keeping your current cost of living in check and contribute the max to your workplace retirement account. Avoid the temptation to buy a bigger home and fancier car.

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Y = Your Number

Consider seeking the advice of a qualified financial planner when you’re asking the question, “How much do I need to retire?'” Ultimately, only you can decide how much you’ll actually spend in retirement. Crunch the numbers on the spending side of the equation and balance them with your anticipated income to determine what you’ll need. Remember, how much you need in retirement varies from state to state. Find out what your state’s number is.

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Z = Zero Debt

Retire your debt, including your home mortgage, before you retire — even if it means postponing retirement, downsizing your lifestyle or even liquidating other assets in order to pay off debt is a great strategy because zero debt goes a long way towards a happy retirement. Even if you’re not retiring soon, eliminating debt goes a long way toward a successful financial future.

Read About: 5 Debts You Need to Tackle Before You Retire

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Now Get Started

A lot of people entering retirement don’t put enough emphasis on personal planning to ensure they maximize their opportunities. Regardless of your age, take the time now — at an early stage in your planning process — to think about the choices you have and how you would like to spend your time — and money — during retirement. Now that you have 26 ways to help you plan for a happy retirement, there’s no excuse to procrastinate.

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