• Dick McEvoy

5 Steps to Take In the 5 Years Before Retirement

Don’t wait until you retire, to see if you are actually prepared for retirement!

For too many people, retirement is some vague concept that they “look forward to” at a random future age – often times 65 or 66 years of age – but once there, these same people realize that they really didn’t have a clue what was in store for them.

These 5 Steps to Take In the 5 Years Before Retirement will help to give you a huge leg-up on your planning, and they can serve to make your transition into retirement smoother, calmer, and much happier!

Step 1: Develop a New Retirement Budget

If you are just beginning to follow me, you’ll realize how important I believe a budget is to absolutely everyone who has the slightest concern about their family’s financial security. A budget, and a brief end-of-month spending analysis, can not only help stop silly spending habits that are sabotaging your lifestyle, but they can also highlight ways to painlessly increase your savings habit. (Free Download: RetireCreativelyBudgetarySystem)

If you are already in the habit of having and reviewing your monthly budget, Congratulations! That is one major sign that you will be well-prepared to make the transition to retirement. But even with a current budget under your belt I still recommend that you Develop a New Retirement Budget (before retirement) which projects how both your income, AND your expenses will change. If you’ve never used a budget up to this point, NOW is the time to start!

(a) Calculate your expected Retirement Income

-The Social Security Administration website ( is full of helpful information and can provide you with your expected Annual Social Security Benefit at various ages from 62 to 70 years.

-If you are one of the lucky ones who still has a Pension at their workplace*, now is the time to meet with the Human resource Office at your firm to clearly understand your expected monthly payout. (*78% of Public Sector jobs, 67% of unionized workers, and only 13% of non-union Public Sector workers were covered by company pensions according to the Economic Policy institute in 2013.)

-401Ks/IRAs   Review your other retirement plan portfolios such as 401Ks and IRAs and start to develop a withdrawal plan for how much you may be able to take on an annual basis, hopefully without cutting into your basic principal amounts.

Remember that these 401K and IRA plans need to help pay for your planned retirement for years to come! A healthy, 65 year-old woman can expect to live an additional 20.6 years on average, and a healthy 65 year-old man can expect to live an additional 18 more years – according to Statista Research & Analysis.

(b) Calculate your expected Retirement Expenses

Review your budgetary cost items (Free Download: RetireCreativelyBudgetarySystem if you are just setting up a monthly budget for the first time), and project how these costs will likely change during retirement.

-If you are looking forward to traveling when you retire, make sure the projected travel expenses are in the new budget.

-Continue to include a “Savings Bucket” in your retirement budget, even if it is just for unforeseen emergencies.

(c) Practice living on your new “Retirement Budget” for 1-2 years prior to your actual retirement, in order to help uncover unforeseen problems that might arise.

Step 2: Do your research on the various Healthcare Supplemental Plans and decide on the one that best fits your needs and your budget.

This can be a time-consuming, but very important exercise and United Healthcare ( can be a good place to start. Only after you’ve done your research to try to find the best plan for you and your needs, and only after you’ve narrowed your choices down to 2, or maybe 3 choices that look good to you, should you then speak to one or two good, retired friends who have been through the healthcare search themselves. They can possibly provide additional insight of people who have already faced some of the healthcare challenges you’ll face in retirement. They will be able to give you some valuable input into how well their plans have worked for them, and how receptive their doctors have been with the plan they chose.

*Make sure that you include these expected Healthcare/Health Insurance costs in your “Retirement budget.”

-You will also need to include the cost of whichever Prescription Drug Plan that you select.

-And if you are considering retiring before you are eligible for Medicare (age 65) make sure that you find a health insurance plan that you can afford, and of course include those costs in your Retirement Budget calculations.

-If you expect to choose a Medicare Advantage (HMO-type) plan, check to be sure that your current doctors are all in the network.

-As part of your Healthcare Supplemental Plan exploration investigate the possibility of buying Long Term Care Coverage (*see separate blog post) and try to learn as much as possible about the types of costs that would be covered/not covered under such a plan. You might also consider using a Roth IRA as a designated personal Long term Care plan, as insurance that you will have the money potentially needed for your/your spouse’s LTC costs, if today’s Long term Care Companies are no longer in existence in 10 – 20 years.

Step 3: Talk with your Spouse about what each of your ideas/thoughts/desires are when it comes to retirement, and about what each of you want out of retirement.

If one person’s idea of a perfect retirement is to spend 3-4 days per week with the grandchildren, and the other person’s idea is to travel around the U.S. in an RV, you need to sit and discuss ways that each of you can compromise while still allowing the other to fulfill at least a part of their dreams. Communication is just as important in retirement as it has been at every other stage of your married life.

Step 4: Investigate other potential income streams you might be able to generate in Retirement, and if they might include some sort of side-hustle that you think you might enjoy, get started at least a year or two before you retire.

-Many people find that they miss being “valued” and needed, and they appreciate earning some additional money, while others who seek some sort of part-time employment are simply looking to have a community that they are comfortable being a part of.

-This will not only give you a sense for what kind of money generation you can develop, but it will also help you to know if you will like the new gig. (This might be writing a blog, being a copywriter, becoming an artist who can generate income through their paintings, tutoring people in areas that you have expertise and where you really enjoy the topic, etc.)

Step 5: Find Your Creative Spark! Start learning or expanding your knowledge about things that you have always dreamed of doing during retirement.

I will be covering a number of very different “creative spark” ideas in this RetireCreatively blog and I invite you to tell me what topics you might like me to explore/write about. Some of the topics that I plan on writing about include:

· Travel (Domestically and Internationally)

· Art (Painting, Sculpting, Photography etc.)

· Learning to Play an Instrument

· Languages (We will review a number of different ways people are learning new languages everyday)

· Gardening

· Cooking

· … additional ideas that Readers are hoping to explore

Retirement can be/should be a time of continued personal growth, and it should represent a chance to pursue the life experiences that you have dreamed about. Let me help you to make your next 10 – 20 years every bit as fruitful and fulfilling as you wish!

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