As you approach retirement, it’s crucial to make smart financial moves to ensure a comfortable future. Experts recommend several key strategies to implement five years before retiring. First, figure out your current spending habits.
Review your debits over the past two years and divide by 24 to calculate the average monthly amount. This will help you determine how much money you’ll need in retirement. Next, do a trial run with your projected retirement budget.
Live on that amount for a few months to see if it’s realistic and make any necessary adjustments. It’s also essential to maximize your savings during this time.
Nearing-retirement financial strategies
Your last five working years are likely to be your highest earning years, so take advantage by contributing as much as possible to retirement accounts. Review your investment portfolio and adjust your asset allocation to match your risk tolerance and financial situation. Being too risky just before and after retirement can have significant consequences.
Take care of any needed home repairs now while you still have a steady income. Handling big-ticket items reduces the risk of large withdrawals early in retirement when market conditions may be uncertain. Finally, update your estate plan to reflect your current circumstances.
Consider using a trust to control asset distribution and review your tax situation to account for any estate taxes. By taking these proactive steps five years before retirement, you can set yourself up for a smoother transition and a more secure financial future. Consult with a financial advisor to create a personalized plan tailored to your unique needs and goals.
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