Retirement Checklist: Everything You Need to Know

By Indeed Editorial Team

Updated February 22, 2021 | Published November 12, 2020

Updated February 22, 2021

Published November 12, 2020

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Retirement planning is an important step for every individual to take. You need to ensure you have the funds in place so that you can retire when you're ready and have the time and money to enjoy your retirement. Reviewing a retirement checklist can help you prepare in advance and ensure you have a successful retirement.

In this article, we share a retirement checklist you can use to help make the process of planning for retirement feel more manageable.

Related: What's the Difference Between a Pension and 401(k)?

Retirement checklist

Here is a list of steps you need to take to prepare for retirement.

Take inventory of your assets

You should start by evaluating your current assets. Write down every income stream, debt, savings balance, liability and insurance policy. You should also include any vehicles, property and other possessions you own. This list can help you evaluate your current financial situation and allow you to plan for retirement accordingly.

Build your emergency fund

It's important, regardless of your age, to have an emergency savings fund in place. This can ensure you have the money you need in the event of an unforeseen emergency. There are different opinions on the amount of money that you should have in place for an emergency. Three months of living expenses is the minimum amount that experts recommend, while others recommend that you save a minimum of one year of living expenses in savings.

Keep in mind that you only need enough money to cover the cost of your expenses, not three months of income. Also consider that you will need to be able to cover any expenses that are currently paid for by your employer, such as healthcare costs.

It's particularly important as you near retirement, as there can be delays with pensions or Social Security money. This savings fund ensures you have the money in place to cover your expenses if you do experience delays.

Add to retirement accounts

The earlier you start saving for retirement, the easier it is to ensure you have the money you need. Regardless of when you start, you should try to save as much as you can each year. There are also tax benefits for putting money directly into your retirement account, as many offer tax-free growth now and also tax-free withdrawals if you wait and withdraw the funds when you reach retirement. This can help you develop a tax-effective strategy for taking money from those accounts, although it's always a good idea to speak with a tax professional as you determine the best strategy for your own retirement.

Related: What Is a 401(k) and How Does It Work?

Understand how retirement income is taxed

As you plan for retirement, it's important to understand how your different sources of income will be taxed, as this can impact the amount of income you have to cover expenses. As you're planning for retirement, ensure you're ready for the tax impact.

Determine your retirement needs

In order to effectively plan for retirement, it's important to understand your retirement needs. Start to determine where you will want to live. Many people relocate closer to family, move to warmer climates or downsize their homes when they retire. You also need to consider whether you will want to continue working when you retire. For example, some people cut back to part-time hours so they still maintain some income and keep themselves busy.

You should also consider what expenses you anticipate when you're retired. For example, do you foresee your expenses going down or do you anticipate traveling more? You should also try to consider, realistically, how long your retirement will be. While this can be challenging to predict, you can always make revisions to that estimate at a later date.

In addition, to help you manage your cash flow and evaluate how much money you will need to save for retirement, you should create a timeline to understand when your different income streams will begin. For example, in addition to Social Security, you may have retirement accounts you contributed to as an employee, individual retirement accounts or a pension. The better you understand the different streams of income and how much money you will have after taxes, the easier it will be for you to prepare for retirement.

Related: 12 Great Part-Time Jobs for After Retirement

Understand how work could impact your retirement benefits

If you plan to work when you're retired, it's important to understand how earning an income could impact your Social Security benefits. For example, if you start receiving your Social Security benefits but make too much money, you may owe some of your Social Security back. Speak to a professional to understand whether working after retirement is a good option for you and how you income could impact any retirement income.

Related: 10 Companies That Offer Part-Time Jobs With Benefits

Talk to professional

Ensuring you have the funds in place to prepare for retirement can be complicated. You may want to consider speaking with a financial advisor who can evaluate your current income and help you plan how much you need to save each year for retirement. They can also help you set up investment accounts to help your money grow more rapidly. A personal financial advisor can set up a customized plan based on your current financial situation and goals and then offer you any level of guidance and coaching that you want to help you achieve your retirement goals.

Use an online retirement calculator

A retirement calculator can help you understand how long your money will last based on the expenses that you anticipate having in retirement. A calculator is designed to take the rate of inflation into consideration as well as the rate of returns. You can consider different scenarios and explore how these might impact your retirement income.

Pay down debt

Ideally, your goal should be to move into retirement free from all debt. While this may not be possible, it's always a good plan to pay down as much debt as possible, such as credit cards and cars. If possible, pay down your mortgage as much as possible so you will go into retirement with as few expenses as possible.

There are different approaches you can take to pay down your debt. One approach is to start by paying down the debts that have the smallest balance and then, once you pay down one thing entirely to put that money towards the next debt. For example, if you have a small personal loan that's nearly paid off, you could start by paying that down entirely before putting all of your extra income towards your credit card debt until that's paid down.

Another approach is to start by paying off the debt that has the highest interest rate. Credit cards typically have the highest interest rate, followed by personal loans and then car loans. In order to pay down debt, you need to pay as much as you can in one area while still making the minimum payments for other types of debt. Because mortgages typically have the lowest interest rates, you should save these for last.

Consider retirement investments

Consider how retirement investments could help to supplement your income. As you're evaluating investment options, keep your level of risk tolerance in mind. It's a good idea to speak with a financial advisor who can help make recommendations for different investments. You should also keep in mind that your risk level will change when you reach your retirement, so you should plan ahead and may want to make changes at that time.

Related: How Does a 401(k) Plan Work?

Develop a plan for health coverage

Healthcare expenses are one of the largest expenses that you'll have when you retire. If you're at or over above the age of 65, then you should be able to rely primarily on Medicare for health coverage. However, you take note of any expenses that aren't covered and determine whether you want to add supplemental health insurance coverage.

If you plan to retire before the age of 65, you may need to find health insurance coverage. If you don't have access to coverage from your last employer or through your spouse, then you will have to find coverage for yourself. Start looking for coverage well in advance of the time that you'll need it to ensure you don't experience a lapse in coverage.

Complete your estate planning

It's important to be prepared with an estate plan. In addition to completing your will, you also need to assign a power of attorney. You may also want to assign a healthcare proxy in the event that you need someone to make healthcare decisions on your behalf. If you have dependents, you need to assign guardians for them and assign beneficiaries for your life insurance policies, shared assets and retirement accounts. It's important to take taxes into consideration as well. It's a good idea to work with a professional who can help you with estate planning.

When you've completed your estate planning, make sure that all of the documents are safely stored. You should also include an inventory of your personal data, including your insurance policy information, bank account numbers and digital passwords. It's a good idea to review this information every five years or each time you experience a life-changing event to ensure it's accurate and that it still fits your needs.

Understand how to withdraw funds

Before retirement, it's important to understand how you will withdraw funds from your retirement account. If you have an employer-sponsored retirement account, decide where you'll roll the money into another type of retirement savings account or leave it where it is. Do your research to learn whether consolidating your retirement accounts is the best strategy. You may also want to speak with a professional to determine what the most tax-efficient option is. You can also work with the institution that manages the retirement account to learn how to withdraw funds when you're ready.

You can sign up for your Social Security benefits in person, over the phone or online, although you'll need to decide how early you want to do this. Keep in mind that the longer you wait to start withdrawing these benefits, the larger your Social Security checks will be.

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