7 last-minute financial moves to make when you’re ready to retire

For most of your working life, you’ve probably thought of retirement in the abstract, as a sort of ethereal, distant concept. But once you hit your late fifties or early sixties, retirement can feel like it’s speeding towards you all of a sudden.

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This is the time to stop thinking about retirement as a dream and Start taking concrete steps To prepare for its reality. Although you may have been planning to retire during your working years by saving and investing, there are more specific financial details that you will have to deal with once you actually retire. These last seven financial moves can help you position yourself for a successful retirement. Retirement plan portfolio on top of old stock certificates.

Reduce portfolio risk

Since you may be retired for 30 years or more, you’ll still need to keep at least a portion of your portfolio dedicated to growth investments like stocks after you stop working.

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However, you also do not guarantee the luxury of time to recover from major market declines as you would if you were in your 20s. If you plan to retire with a $1 million portfolio, for example, and hit a major bear market when you stop working, you could end up with $800,000 or less in your account. This could lead to significant damage to your quality of life if you are looking to live off this income. For this reason, most advisors recommend lowering your portfolio risk level as retirement approaches. 401k retirement statement

Zoom in on 401(k) contributions

One of the biggest benefits to your retirement savings when you’re in your 50s is the compensation provision. Once you reach 50 years of age, the IRS allows you to contribute an additional $1,000 to your IRA or $6,500 to your 401(k) plan. This brings the maximum annual contribution allowed to $7,000 and $27,000, respectively.

If you are in a position to get the most out of your retirement accounts, this could result in total contributions of $70,000 to an IRA or $270,000 to a 401(k) plan from ages 50 to 60. Your earnings level is in your 50s, this is a great time to boost your retirement accounts.

Social Security Benefits Application Form

Plan a Social Security Claim Strategy

For eligible workers born in 1960 or later, the full retirement age is now set as 67. However, you can apply for retirement benefits at any time between age 62 and 70. The right age for you depends on a number of factors, which is Better decide in consultation with a financial advisor.

If you claim at 62 instead of 67, for example, you’ll get your money back ASAP and receive a full five years of additional payments. However, your payments will be permanently reduced by 30%.

Every year you wait to claim benefits from age 67 to 70, on the other hand, your payments will go up by 8%. The bottom line is that waiting to advance at age 70 instead of claiming at age 62 will result in a permanent increase in your benefits of about 77%.

Of course, you have to wait eight long years to get these benefits. This is why it pays to plan your Social Security claim strategy before retirement, so you can maximize your benefits along with your other retirement savings and benefits.

Senior couple meeting with counselor.

Set a retirement budget

It should come as no surprise that after you retire your monthly budget will look different than it does while you work. Medical expenses, travel expenses, and higher gifts are common among retirees, but many other expenses may be lower.

To make sure your nest egg can cover all of these expenses, it’s important to put together a retirement budget. You’ll never know exactly what your monthly expenses will look like after you retire; But the closer you get to retirement, the more accurate your estimates will be. Start crafting a retirement budget early while you’re still working and then refine it as retirement approaches for the best results. Close-up of a Medicare card.

Check Medicare Terms

Most Americans get access to Medicare once they turn 65, but that doesn’t mean you’re completely protected from all health expenses for the rest of your life. In fact, to get Part B coverage, which includes things like doctor bills and outpatient services, you’ll have to pay a monthly premium.

But there are many things that even Part B does not cover for which you may need outside insurance as well. If you plan to retire early and claim Social Security at age 62, be aware that Medicare doesn’t start working until age 65. Be sure to do a thorough research of your current coverage to see if it will cover the gaps in Medicare once you retire. Side view of Asian female nurse and older African American male patient interacting with each other while standing in the corridor at retirement home.

Create a long-term care plan

One medical cost that Medicare generally does not cover is long-term care, although some nursing home and rehabilitation facility costs are covered. However, about 70% of Americans age 65 will need long-term care at some point, according to a study by the Urban Institute and the US Department of Health and Human Services.

If you’re about to retire, it’s time to speak with a reputable insurance agent about the types of long-term care policies available and appropriate to fill any gaps in your coverage. In general, long-term care policies are not expensive, but they may prove invaluable in protecting your nest egg if you need extra care.

old people move

Consider downsizing

Many retirees find themselves in a “too many homes” situation. This is especially true if you no longer have a spouse and if your children have moved away. While you may have an emotional attachment to the four-bedroom, three-bathroom home you raised your family in, if you’re going to retire on your own, you may need no more than a one- or two-bedroom home, or even an apartment.

Not only will you save your monthly rent or mortgage expenses, but you will also reduce your maintenance and utilities costs. If you are in a position to downsize before you retire, you will have more extra time to save money each month.

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This article originally appeared GOBankingRates.com: 7 last-minute financial moves to make when you’re ready to retire

The opinions and opinions expressed here are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.

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