Before you make your plans official to retire in 2016, you might want to consider taking the
following steps to ensure that you’re on the right path.
1. Begin living on your planned postretirement income now. Most of us plan to live on about 70
percent of our current income once we hit retirement. While that may seem like no big deal, it can
be a huge, uncomfortable adjustment for some. It’s a good idea to get used to your postretirement
income level now, before you have to. Not only will that help you to learn whether you’ve given
yourself a reasonable amount to live on but it will also give you even more money to contribute to
retirement accounts so you can increase your savings in the last few months before retiring. And if
you learn that your postretirement income plan is too lean, you can rework your expectations and
2. Rethink your risk tolerance. The risks you’re willing to take with your savings might be much
higher when you’re still earning an income. This is because, as an income earner, you can
potentially replenish your savings after losses. This isn’t an option that retirees have. Before
retiring, it’s a good idea to lock in gains and reduce the risk of losses right before you need to start
taking income. Work with your advisor to reassess your risk tolerance and rebalance your portfolio
during the months leading up to your actual retirement.
3. Say goodbye to debt—and credit. Increasing your debt before retirement is probably not the best
strategy for creating postretirement financial security. That means you should pay special attention
to paying off your debt in the months leading up to your retirement and avoid making any decisions
that increase your debt load.
Retirement may just be one phase of life, but it’s the final phase—which for many means it’s
irreversible. Making mistakes in the months or years leading up to retirement can put a wrench into
your overall plan for your golden years, so it’s important to treat preretirement time with just as