Planning for retirement is something that you should start as early as possible. Ideally this means that you set up a Roth or traditional self-directed IRA as soon as you get your very first job. But sometimes, planning falls apart, and you realize that your long-term plan just got a whole lot shorter. You now plan to retire in five years.
Your planning process will develop and change over time. For example, if you get married or have children then you’re almost certainly going to revisit your existing retirement plan and reevaluate it. And as you get closer to your desired retirement age you should frequently look to make sure you’re on track to meet your goals.
If you intend to retire in five years, here are some steps you might wish to consider taking in the very near future.
Plan To Retire in Five Years Tip #1: Estimate Your Social Security Benefits
Even if you don’t plan to rely solely upon your Federal Social Security benefits to fund your retirement, Social Security is still likely to be a factor in your retirement funding. Each year the U.S. Social Security Administration sends you a written history of your taxable earnings, as well as an estimate of what you might expect to receive once you reach your full retirement age. Use this to help your planning during these last five years. There are also numerous online benefits calculators that you can use to test different scenarios based on what you anticipate earning during the last few working years before retirement.
Plan To Retire in Five Years Tip #2: Consider Where You May Wish to Live
It’s becoming increasingly common for new retirees to use their retirement as an occasion to move to a part of the country where the weather is better and the living expenses are lower. Some retirees are even moving to different countries in order to make their retirement nest egg last even longer.
If you decide that moving in five years is likely to be part of your overall retirement strategy, then there are some steps you can take now to make sure you’re on track. What do you need to do to get your house ready to sell? Do you need to do any research on the location you want to move to – will you need to apply for a particular type of visa in order to become a retiree resident?
Plan To Retire in Five Years Tip #3: Identify All Your Assets and Potential Income Streams
It’s important that you have as complete of a picture as possible as you approach retirement in five years, regarding your financial situation. In addition to evaluating the investments in your self-directed IRA, you should also identify all of the other assets and income streams that will benefit you financially during retirement. These are likely to include Social Security (which we discussed above), any 401(k) or pension plans you have, your taxable investment accounts, your illiquid investments, your real estate holdings, and any whole life insurance policies you’ve taken out.
During your working years it’s important to save as much for retirement as possible. But when you reach a point where you’re five years away from retirement, the planning and decisions you make with regard to your retirement savings are likely to be at least as important as your actual savings during those five years.
Quest Trust Company helps change people’s lives and financial future through self-directed IRA investment education. Quest Trust Company helps people invest in what they know best and build their financial future on their own terms.