How do I get ready to retire?
From making catch-up contributions to choosing a retirement date, this article takes you through everything you need to know about getting ready for retirement.
Summary
65 is considered a traditional retirement age and when you become eligible for Medicare.
There is no one-size-fits-all approach. However, there are multiple key milestones you need to hit to maximize your retirement returns.
Some people may decide not to fully retire at all, opting to continue to work part-time.
A financial advisor can help you get ready for retirement and ensure you have the right retirement plan in place.
When do I know I’m ready to retire?
It’s never too early to start planning for your retirement. Ideally, it’s something you spend your whole working life planning for, so when the time comes, you’re ready.
Having said this, when you decide to take the plunge, it won’t happen overnight – regardless of how much you have in your savings accounts.
It also won’t happen at the same age for everyone.
65 is considered a traditional retirement age, and when you become eligible for Medicare, workers in the US generally retire around the age of 64.
This number varies depending on many factors, including your Social Security benefit, your retirement savings, any pensions you might have, and even the lifestyle you want when you retire.
Some people may decide not to fully retire at all, opting to continue to work part-time.
While there is no one-size-fits-all approach, there are multiple key milestones you need to hit during the retirement process to maximize your retirement returns.
Your retirement timeline
The earlier you start getting ready for retirement, the better placed you’ll be once you say goodbye to the working world.
While you may not think about it when you’re starting your first day at your first job, you need to start thinking about and saving for retirement as early as possible.
While you can save throughout your career, the getting ready process really kicks up a notch up to 15 years before you retire, so it pays to be prepared.
The timeline below can help chart the process at each milestone.
Age 50
Start making catch-up contributions to your retirement plans. Also, make sure you’re checking your Social Security statement every year to get an accurate view of your estimated benefits.
Age 59½
You can now withdraw from your retirement accounts without any tax penalties. But even though you can do it, it doesn’t mean you should. Leaving your fund untouched means they have more time to grow.
Age 62
This is the minimum age you can start receiving your Social Security benefits. Similar to your retirement nest egg, these funds are best left untouched, giving you a bigger monthly benefit down the line.
Age 65
You are now eligible for Medicare. Eligibility starts three months before you turn 65 and ends three months after your 65th birthday.
Age 67
If you were born after 1959, this is the age at which you become eligible for full Social Security benefits.
Age 72-73
It’s more than likely you will be retired by this age.
At 72 (or 73 if you reach age 72 after Dec. 31, 2022), you must begin taking minimum withdrawals from most retirement accounts each year; otherwise, you may be charged heavy penalties in the future.
What tasks do I need to complete before I retire?
Before you embark on this new and exciting chapter in your life, you must cross a few important things off your to-do list.
Here are 12 tasks to complete before you retire:
Develop a financial plan with a qualified financial advisor.
Determine your retirement income sources and when you will access them.
Complete a cash flow analysis to determine if your savings will cover your expenses.
Create an annual retirement budget.
Pay off as much debt as possible.
Have at least three months of living expenses in an emergency fund.
Choose a retirement date.
Determine the retirement lifestyle you want.
Review your investment strategy.
Establish a plan for covering your long-term healthcare expenses.
Apply for Social Security and Medicare benefits at least three months before your targeted first payment date.
Develop an estate strategy.
Get expert help planning for retirement
Everyone approaches their retirement differently, but one thing we should all recognize is the value of getting expert help when making big financial decisions.
An SEC-regulated, fiduciary financial advisor can help you get ready for retirement and ensure you have a solid financial plan as you approach your golden years.
Unbiased empowers you to make confident financial choices by helping you find a financial advisor perfectly suited to meet your needs.
To speak to a financial expert, simply answer a few questions, and our dynamic search tool will pair you with the right finance professional for you.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.