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With only 60 days to go before you retire, you might already be dreaming about that first morning waking up without a schedule. But while two months may seem like nothing, there are still some things to take care of before you can spend your days roaming around in an RV or golf cart.
Here are four items you may want to consider adding to your retirement checklist 60 days out.
1. Time your cash flow.
Once your steady paycheck goes away in retirement, you’ll likely want to tap your savings accounts and financial portfolios. The crucial decision is when to do this.
“One of the most important things to concentrate on is the timing of your cash flows,” says Tom Duffy, CFP®, a fee-only financial advisor at Jersey Shore Financial Advisors.
At the 60-day point, you probably will have determined with your employer whether you’ll receive a pension or other benefits after retiring. You will want to make sure these accounts are set up so you can make withdrawals, rather than just deposits.
“If you have to set up direct debit or direct deposit from a retirement account, what day does that start and when does it appear?” Duffy says. “Try to match that to what your cash flow has been.”
By making your accounts accessible for withdrawals the same day you retire, you may avoid spending a week or more without any new funds. As with any important financial decision, be sure to speak with a representative from your financial institution or other financial professional you trust to be sure all of your accounts are ready for this change.
2. Consider the tax implications.
Retirement may also mean tax changes for you that can affect how you are able to maximize your savings. Some tax planning in your last 60 days could be a necessity.
“Do a tax projection of what your situation looks like now vs. what it will look like once you retire, and see how your tax situation will change,” says Laurie Burkhardt, CFP®, wealth manager at Modera Wealth Management.
And as always: Be sure to consult with a tax professional before making any major decisions about the tax implications on your personal finances.
3. Prepare for the emotional switch.
Even if your money is ready for retirement, you might be neglecting how big of a shift you’ll experience emotionally.
“For a lot of people, their career is their identity,” says Kevin Reardon, CFP®, a fee-only financial advisor at Shakespeare Wealth Management. Living without a job might feel foreign, but it can also be an opportunity. “You have 168 hours in a week. How do you fill those hours?” he asks.
You might want to speak with friends who have recently retired and consider looking into clubs, volunteer opportunities, or even part-time work to make the transition seem less drastic.
“Before you retire, really figure out what is important in your life,” Reardon says. “Typically, this is the juncture of life where you can act on that.” Identifying a purpose or passion to follow in retirement may help you adjust without feeling lost.
4. Live your new life on a test run.
To fully test the emotional and financial impact of your retirement plans, you might want to use some accrued vacation time and practice your new life for a few days.
“Have you done a dry run and practiced your new routine?” asks Allison Alexander, CPA and financial advisor at Savant Capital Management. “By doing that, you’ll get a much better feel for your expenses.”
According to Alexander, by spending a few days as if you were already retired, you can get a feel for how happy you are with the activities you have planned. You might be surprised and realize you don’t enjoy some of the plans you’ve made. Finding this out two months before you retire might help you reconsider certain aspects of your retirement plans and also help in finalizing your budget.
“The way you spend your time will also dictate how you spend your money,” Alexander says. By simplifying your activities to only those you know you’ll enjoy, you can streamline your finances and leave room for unexpected expenses, as well as extra savings.
With 60 days before you retire, each move you make can impact your new life.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
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