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- If you want to retire in five years, a financial planner recommends taking five steps.
- Check in on your financial plan and your investments to make sure you’re invested correctly.
- Make a plan to save more, and to get health insurance after you leave work.
- Use Blooom to analyze your 401(k) today and see how you can grow your retirement savings »
Planning for retirement is complicated, and it can take decades of saving. If you’re nearing the end of your time working, you’ll want to start planning for the next step sooner rather than later.
Amy Richardson, a financial planner with Schwab Intelligent Portfolios Premium, says that there are five steps to take now if you want to retire in the next five years.
1. Make a financial plan now
As a first step, Richardson recommends taking a look at your financial plan — or making one.
“What are the short- and long-term goals that you have? What lifestyle do you want to live in retirement? The answers to those questions are really going to drive so much about the next couple of steps,” Richardson said.
Making an appointment with a financial planner can be a smart move if you need help. And, plenty of resources are also available online for free. Richardson recommends using a retirement calculator to make sure you’re on track.
2. Start to increase your savings however you can
Even if you’re already saving, bulking up your retirement cash is critical in your last few years of work.
“Put away as much as you can into those savings vehicles, whether it’s retirement accounts or brokerage accounts, to help really build up that nest egg,” Richardson said.
She recommends using automation to save more. “I’m a big believer in automation. I do it for myself, because it’s creating a habit, and I don’t have to think about it,” she said.
You can automate deposits to an IRA or a brokerage account. While 401(k)s are already automated, increasing the amount saved each paycheck could be helpful.
3. Check in on your retirement portfolio
After starting to save more, it’s important to make sure your account is ready to grow for the next few years, and support you after that.
“Make sure that you’ve got a diversified portfolio and it aligns with your retirement time horizon,” she said. “As we think about getting closer to a retirement date, usually our risk tolerance goes down and we’re more concerned with protecting some of that principal.”
Making sure that your portfolio isn’t entirely invested in stocks or too heavily in one area will ensure that the money is available to live on when you’re ready.
4. Make a plan for how you’ll get health insurance
Health insurance is critical, but may disappear after you stop working.
“Healthcare tends to be one of the biggest expenses for retirees. If you’re retiring before age 65, which is Medicare age eligibility, you’re going to need health insurance from the private marketplace,” she said.
It can be a big expense. Where your employer may have paid all or part of your healthcare costs before retirement, you’ll be responsible for paying for the health insurance itself and any other expenses, at least until you’re eligible for Medicare.
5. Think about the non-financial parts of retirement
A lot of retirement isn’t financial — you have to decide how you’ll live in retirement.
“It’s not about retiring and sitting on the couch for a lot of people, but it’s the ability to choose what kind of work they do and when they want to do it,” she said.
It’s something that you should start planning for well before you leave your job — having an idea in mind of what you’d like to do and how you’d like to live can help you with your planning and make the transition easier later.
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