Planning To Retire in 2024? Here Are 6 Things You Need To Do First

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If you’re looking to retire in 2024, congratulations! The life you’ve likely dreamt about for decades is suddenly right around the corner. But to ensure that your transition to post-work life goes smoothly, there are some important steps that you should take — and the sooner, the better.

While the time has passed for you to significantly beef up your retirement contributions, there are still some things you can and should do to get your financial life in order before you sail off into the sunset. Here are some of the most important.

Adjust Your Asset Allocation

As soon as you give up the steady income of your job, you’ve got to switch from an accumulation mindset to one of preservation. This doesn’t mean that you should sell all your stocks and hunker down in Treasury bills, but it does mean that you’ve got to take the realities of time into account.

While you may face a retirement of 30 years or more, meaning you’ll still need to have some growth in your account, you also won’t have income or employer matches to help make up for any market selloffs. If you’re 100% in stocks and the market falls 30% the year you retire, your lifetime income could be significantly impacted. Try to strike a balance between your desire for growth with your need for capital preservation.

Develop a Social Security Strategy

Social Security might seem like something automatic, but to maximize what you get out of it, you should work on developing a payout strategy before you retire. You can take benefits as early as age 62 or as late as age 70, and in an actuarial sense, you should theoretically receive the same amount of total benefits regardless of which you choose. But the reality is that if you’re going to live a long life, you’ll get far more out of Social Security if you wait to file than if you file early.

From age 67 to age 70 alone, your check will increase by 8% per year, assuming you were born in 1943 or later, for a whopping 24% increase at age 70 vs. age 67. The difference is even more significant if you file at age 70 instead of 62. But as each person’s financial situation is different, you may actually be better off filing at age 62.

The year before you retire is the time to analyze your situation, perhaps in consultation with a tax or financial advisor.

Do Your Best To Get Out of Credit Card Debt

The best time to finally get out of credit card debt is when you are still drawing a paycheck. Although it might take some sacrifice, getting out of credit card debt before you retire is one of the best gifts you’ll ever give yourself. With credit card interest rates topping 20% in most cases, the money you use to pay down your debt will give you a return better than anything you could get in your investments.

And if you carry debt into retirement, you’ll have a potentially ever-increasing drain on your cash flow at a time when you’re living on a fixed income.

Make Sure Your Emergency Fund Is Solid

Financial emergencies are a fact of life, and they come whether you are still working or already retired. That is why you should always have an emergency fund. But before you actually retire, you should do your best to beef up that emergency fund, because you won’t likely be adding much to it after you stop working.

When you have a steady job with a rising income, you can afford to set aside some money every month to keep building your emergency fund. But most retirees don’t have a lot of room in their budget to significantly increase their emergency funds.

So, while you’re still working, do your best to have adequate reserves so that you can weather some emergencies in retirement without falling into debt.

Start Thinking About Your Retirement Budget

Creating and sticking to a budget is even more important in retirement than during your working life. If you overspend in retirement, it can be harder to avoid going into debt, as you no longer have a steady job. While you can pick up some part-time work in retirement to help pay the bills, that isn’t what most people have in mind when they hang up their working shoes.

Drafting a retirement budget in advance is a good strategy, as you’ll have a road map already in place by the time you retire.

Sort Out Your Healthcare Situation

The biggest single expense for most retirees is healthcare. As costs can quickly get out of hand, it’s important to understand how Medicare works and if you need additional private insurance. While Medicare Part A is free and may cover most of your hospital insurance bills, for example, it doesn’t provide medical insurance. That is covered by Medicare Part B, and that will cost you a monthly premium.

But even these two parts of Medicare may not cover all of your health expenses, such as prescriptions and certain procedures. Take the time before you retire to research the best health solutions for your retirement so that your total healthcare costs are as low as possible.

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