Nearing Retirement? Here’s Your Retirement Planning Checklist

When we typically talk about retirement planning, we’re thinking about our long-term investments. While that is essential, we also need to plan for our retirement from other perspectives so we’re emotionally and financially prepared to take the leap. If you’re thinking about retirement or semi-retirement, you’re in the right place. Today we’ll guide you through all the things you should be thinking about if you’re preparing to retire in the near future.

Retirement Planning Checklist

1. Review Your Finances

There are a few things you need to do to be financially ready to retire:

  • Review your savings
  • Identify any current or potential income sources
  • Calculate your retirement needs
  • Create a budget
  • Plan for the unexpected

We’ll review your overall savings, then we’ll pause to consider the quality of life you want to have moving forward, and then we’ll return to your finances to figure out how realistic that is and how you can ensure you have that quality of life for the rest of your life.

Review Your Savings

The first thing you need to do is get a current balance of all your savings (retirement or otherwise) so you know exactly how much you have and, later, how much that will give you as a monthly income. You’ve likely been saving for decades, but we usually put our retirement plans on autopilot and let them be. Now is the time to review them.

Look for:

  • Employer-sponsored plans (401(k), 403(b)s, or 457 plans)
  • IRAs (Individual Retirement Accounts)
  • Pensions
  • Social security benefits
  • Annuities
  • Other investment accounts
  • Other savings accounts

2.  Make a Plan on How You Want to Live 

Most people look to retirement as the ultimate goal: finally, the nirvana where you are completely free to do as you please. But you’d be surprised how many people flounder after 1-6 months when they realize their lives will be very dull if they don’t take charge, schedule things, and explore new interests.

If you have already planned all the different things you’re going to do with your time, you can note those all down and move on. But if you haven’t, now is the time to do some brainstorming and consider what you want to do. It’s a good idea to create a schedule for yourself for the first few weeks that balances downtime (i.e. days with nothing scheduled) with scheduled to-dos and events.

Here are some points to consider:

  • What hobbies do you want to do? Are there new hobbies you’d like to try? What do you need to do these hobbies? Do you want to take a class, read a book, or join an online course so you can learn how to do it?
  • How will you get the same level of social interaction you have at your job? If you’re in a people-facing role, you may want to hibernate for a few weeks, but after that, you’ll miss the interaction. Consider if there are clubs you could join or if there are activities you can do with your family so you have weekly scheduled social time.
  • Do you want to travel? If so, how often and where?
  • Would you like to continue doing any form of work? For example, would you like to volunteer your time? Would you like to work one day a week? Is there a family member with a business you can help? Is there an entrepreneurial venture you’ve always wanted to try?
  • How will you exercise? Now may be the time to start taking swim classes, attending gym classes, hiking during the week, investing in an electric bicycle, or getting a gym membership.
  • Where do you want to live? Do you want to stay where you are? Do you want to move closer to family? Does your current home provide you with the space to do what you want?

Of course, all of this can (and will) change over time, but by having a plan now, you can dive into retirement with confidence and joy, rather than feeling like you’ve lost your purpose after a few weeks or months. It will also help you in the next stage, which is budgeting.

3. Identify Your Income Sources

Next, go through your retirement accounts and any other income sources you will continue to have and figure out how much that will give you each month. If you plan to continue working part-time or doing some kind of freelance work, you can include it here, but be aware that long term this is “bonus” money, in that it may come and go or you may eventually be without it if you fully retire.

4. Calculate Your Income Needs and Create a Budget

Now you’ve got a better idea about how you want to live and you know how much money you have to spend, it’s time to create a budget. Note that not all of these things need to be identical to how they are right now – you may spend more, you may spend less. Some may naturally change (for example, spending less on fuel), and some you may decide to change (such as moving to reduce your outgoings or to get that bigger yard you’ve always wanted).

Here are some of the considerations when calculating your needs and approximate budget:

  • Housing
    • Do you still have a mortgage? Would you prefer to downsize so you can be mortgage-free?
    • Does your current home provide you with the lifestyle you want? Is it time to move further away from town so you can have space to grow vegetables, or do you want to move closer so you can walk everywhere?
    • Consider other costs, such as property taxes, electricity and gas bills, maintenance costs, home insurance, and any other costs you can think of (monthly, annually, or occasional).
  • Healthcare
    • Will you need to pay for your own insurance?
    • How much can you expect your healthcare costs to be, and are they likely to go up? If so, how much?
  • Transportation
    • Will you keep your car, or will you get a different one?
    • Do you drive for pleasure, or simply to get from A to B?
    • How often will you use your vehicle? Will this change how much you’re paying for fuel?
    • Consider all the usual costs, such as car payments, maintenance costs, and so on.
  • Food
    • This will be the same for most of us, but if your company currently provides your lunch, you may find your food bill increases once you retire.
  • Discretionary spending
    • This is all the things we talked about in Section 2, such as hobbies, exercise, travel, and so on.

As you make your budget, you may find you need to adjust a few things in your plan. If this feels overwhelming, work on the budget regularly leading up to your retirement, rather than trying to tackle it in one or two days. You’ll be able to find a balance between what’s realistic for you and what you want to do.

5. Plan for the Unexpected

Here’s the good news and the bad news: you’re probably going to live for a long time after you retire. This is great because most of us want to live a healthy life for as long as possible, but it also means you need to be forward-thinking about unexpected things that come up. Have you built in a bit of a buffer to your budget? Consider:

  • Inflation: the economy goes through good times and bad, but inflation is a constant. Have you considered how you will combat that? Generally speaking, the average inflation rate is about 4%, so you’ll need some form of investments to combat that rise.
  • Emergencies: Life will likely be easier once you’ve retired, but emergencies still happen. Make sure you’ve got a buffer of savings to cover these unexpected costs.
  • Economic ups and downs: You’re no stranger to economic ups and downs, but you should keep them in mind moving forward. Remember that if you increase your budget to account for cost of living increases, you may end up with less money than you originally planned. Keep a diverse portfolio and regularly review your budget to make sure you’re still on track.

Consider Downsizing or Relocating

One of the easiest ways to reduce your spending and prepare for your new chapter is to move to a new home. As you approach retirement, consider your housing needs and whether they have changed:

  • You may want to downsize to a smaller, more manageable home
  • You may want to move somewhere else where you can be mortgage-free
  • You may want to move closer to family for support and companionship
  • You may want a more affordable home to reduce your living expenses
  • You may want a home that offers features or amenities your current home cannot, such as single-story living, a large yard, or close proximity to recreational activities

If you decide that downsizing or relocating is the right choice for you, it’s essential to work with professionals who can help you navigate the process. As licensed realtors and home buyers, we can provide expert guidance on how to sell your home quickly and efficiently. Simply give us a call to discuss your options and we’ll help you decide on the best way to move forward and set yourself up for retirement in a new home.

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