Image by The U.S. National Archives via FlickrBecause my nest egg will never be as big as it should be to retire on, I have made myself a list of the things I must accomplish before the big day. Yes I am talking about the day when I go to work for the last time. When that day comes I will be ready because I have eliminated money drains from my budget.
Mortgage. This is my biggest item on the list. To finally pay off the monthly principle and interest payments eliminates a huge expense from my retirement budget. I know I will still have to pay insurance, maintenance, and property tax. But that can be budgeted and made affordable.If these costs are high in your area, you'll have a hard time affording them in retirement. You may consider downsizing if this will save you money.
Credit Card Debt. You don't want to use your savings to pay for expenses you incurred while working. I don't like to have credit card debt now and when I retire,too. I am still paying of some balances today, but will be done well ahead of retirement and I'll keep it that way.
Second Car. With my wife and self not working anymore a need for a second car is eliminated. Going to one car saves money in fuel, insurance and repairs. Sure you lose some convenience, but you save the cash. It will work for me. But if you have to have a second car, make it a used, low mileage model. And remember no payments.
Home Repairs. Get all your home repairs done while your still working. Whether it's a new roof, carpet or washing machine get these thing taken care of before retirement. Also try to anticipate things that will need attention late, take care of them before time or set aside the money to be used later.
Expensive Investments. Make sure all your investments are in accounts that have the lowest possible fees. Even a one percent difference in fees will make a big difference over the years. This is something that should of already been done.
Unnecessary Services and Utilities. If you have a cell phone and a land line why not consider closing the land line. If you have Internet and cable, why not consider canceling the cable and watching TV online. There may be other unnecessary items you don't really need, so why not cut them off and save some money.
Taxes. If you have some taxes to pay when withdrawing money during retirement, it may pay to hire a financial planner, accountant, or estate planner to help you tap your investment accounts in the correct way to minimum the tax implications.
I am planning ahead today so I can do the right things later. Also consider preparing for insurance, health care, long-term care, and estate planning in you retirement. Take care of these thing today and get organized.
I've done it all but the taxes. It is actually pretty easy to do on your own- figuring out what to take out first. We plan on not taking out anything until we need to. So far we have done well on my husband's pension and some side jobs.
ReplyDeleteAs far as the car. We bought a new one five months before retirement. NO bells or whistles - they break too easily. Giving up the second car is harder than expected...but the insurance in our area continues to rise with the population...so it is on the way to "sold" pretty soon.
Otherwise- everything else is checked off your list for us as of May of 2010 and it feels GOOD!
Janette, I am glad you planned so well. I still have many years to go till I'm there. So I'm still preparing. I can't tell you how much I am looking forward to my own retirement. Thanks.
ReplyDeleteGood list. I intend to retire in 8 years and, like you, my funds on which to retire will still be less than optimal. There's 3.5 years left on my mortgage. I have much too much credit card debt which I'm working to reduce. If it's not gone when the mortgage is done, I'll apply my prior housing costs to wiping out the rest of my debts, which should take two years or less. One of the things I do intend to do when I retire is sell/give away/junk my minivan and buy a used but relatively new Prius or Scion for my retirement years.
ReplyDeleteI can't wait to give up the huge cell phone plan and an extra car. We just switched to a 15 year mortgage, so hopefully that will be paid off in time for retirement too. (I wish we had a 15 year mortgage when we bought this house, because then we would have only had 3 years left to pay!)
ReplyDeleteGrace, Your working hard to take care of all those pesky bills so you can live debt free in retirement. It's going to be so worth it.
ReplyDeleteSharon, I'm working along the same lines as you but with 1 little one and 3 in college, it sometimes feels impossible. The years sure do sneak up on you. I wish I had started sooner
Very valid suggestions; I believe that post retirement you also get a retiree credit on your home insurance as you are at home more often and there are lower chances of break-ins.
ReplyDeleteI didn't know about the retiree credit, that's good to know.
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