When Is the Best Time to Evaluate Your Retirement Situation?

When Is the Best Time to Evaluate Your Retirement Situation?

(FinancialHealth.net) – By the time they retire, most people hope to have their mortgages paid off and enough money flowing in to pay the bills and then some. But life happens and there are several scenarios that could trigger a change in plans along the way. Five years before retirement is a good rule of thumb to evaluate these potential issues ahead of time and come up with a viable living plan.

Evaluate Your Retirement Budget

Exactly where to spend one’s golden years is something to consider carefully and include in retirement planning. Preparing 5 years before retirement allows enough time to evaluate the budget and how you’ll pay for household expenses. Here are some things to consider:

  • If your home is paid off, is there enough residual money coming in to pay for taxes, insurance and upkeep?
  • Will you be able to pay for someone to care for the yard or upkeep?
  • Is there enough money (besides savings) to cover life-changing emergencies, like an unexpected illness?
  • Do you have an emergency fund?

Working these questions into your 5-year plan is important. If you answered NO to these questions, it may be time to downgrade to a smaller home or apartment.

Have Big Travel Plans?

For some people, their retirement wishes are to travel more or spend a significant time away from home. If this is you, is keeping that big house really such a good idea? For the adventurous soul, buying or renting an RV may be a good fit. Starting about 5 years before retirement, be sure to rework your budget for an RV, travel expenses and a smaller residence or apartment.

Address Life Changes

If you haven’t looked at your retirement plans in the last 20+ years, chances are things have changed dramatically. Sit down with a financial advisor or glance over your portfolio to revisit these plans. Spouses, kids, grandkids can all play a part in how much cash you have available in retirement. Keep these changes in mind when evaluating what you can afford, or if adjustments like moving in with family or a friend are a good idea.

Be Insurance Rich

Retirement is an achievement that highlights accomplishments, both personal and financial. Plan ahead for things like long-term care expenses with the right insurance policy, otherwise, existing assets could be at risk.

Be sure you and your spouse are getting the most out of your life insurance policies. Will they pay off the mortgage and excess debt, leaving enough to live comfortably for 20 to 30 years should one pass away? If not, talk with an insurance agent to get the right coverage.

It’s important to consider not only your current living situation ahead of retirement but how it could change several years from now. Doing this about 5 years before the event ensures there’s plenty of time to make proper financial adjustments. Planning ahead protects your assets, home and most of all brings peace of mind.

~Here’s to Your Financial Health!

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