One year before retirement: Here’s seven things you can start right now

It doesn’t take a financial planner to tell you this: Any successful retirement these days starts with a plan. The more planning you do, the more likely it is that you will see a successful retirement.

That said, many people may still enter retirement without confidence in their plans.

With that in mind, people may become more worried as retirement approaches. Their whole world is about to change.

So, here’s some advice. You are one year away from retirement. Here are seven things you can start doing right now.

  1. Budget, budget, budget. “If it’s a husband and wife, the most important thing they can do is sit down and X-ray their check book and go through every line item they spent over the past year,” says Jack Teboda at Teboda & Associates in Elgin, Ill. “By doing that, they can get a better understanding as to what the budget will be going into retirement and what resources they have to maintain that budget.”

“Know exactly where you stand financially,” says D. Brett King at Elite Financial Associates in Tampa, Fla. “You may be planning to retire in a year, but you need to know if you can afford to retire based on the lifestyle you want. There are times when someone wants to retire and they were not in the position they thought. They either have to raise the amount of money they have saved or adjust what they will live on. You should not take it for granted. Just because you are a certain age and you want to retire, you may not be in the position to retire.”]

  1. Pay off debt. “Get rid of as much debt as possible before you retire,” says Teboda.

“Credit card debt is always one you’d lie to eliminate. Also, consider reducing some of the bigger debt. It would be nice if you can get out from beneath your mortgage.”

King says reducing debt will improve your cash flow in retirement. “That doesn’t necessarily mean paying off your mortgage,” he says. “You may not be able to afford to do that. If you have higher interest debt like credit card debt or “parent” loans for college, pay those down (or off) so you don’t use retirement income to pay higher-interest debt.”

  1. Find a financial advisor. King says the first thing he wrote in his book, Keys to Your Golden Years, was how you need to find the “perfect” financial advisor.

“One year from retirement you should be starting to work with an experienced retirement advisor,” he says. “He (or she) will help you go through the myriad of areas and choices you will have to make. We put together a retirement road map. “

You may end up reaching out to a variety of financial professionals to help with your retirement planning. For example, a Certified Financial Planner, an insurance professional, an investment advisor or Registered Rep, as well as tax and/or legal professionals.

  1. Have a written retirement plan. “You really should not retire or even think about retirement if you don’t have a retirement plan in place,” King says. “A year away you need to sit down and get that taken care of. That plan will include what we call a retirement income analysis, which will basically show how long your money is going to last.”

King says many surveys show that people’s biggest retirement fear is running out of money. “Yet, so many people retire without a plan in place and they don’t have any idea how long their money will last. They will take it out as they need it and somewhere down the road, if they live long enough, they will run out of money.

  1. Look at the risk in your portfolio. “I would certainly look at if we had another 2008, how much of retirement I could lose to a downturn in the market,” Teboda says. “I would search out and find an advisor who would help me and tell me how much risk I’m taking and the amount of fees I am paying. How much risk is there in my 401(k) and how much risk is there in my IRAs.”
  2. If you have a pension, understand your options. Retiring Baby Boomers will be the last generation in which large numbers of people have a pension. Only 13 percent of Americans have a pension today, according to a survey by My Budget 360.

“Search out the different options,” says Teboda. “Does it make sense to take the pension or does it make sense to take a lump sum. It is not one size fits all. For some people, it’s better to take a lump sum, for others its best taking the pension.”

“If your employer has a pension plan, look at what the payout options are,” says King. “Get a benefit statement from your employer that will project what your pension benefit amount will be.”

  1. Know what you will do with your free time. ‘What will you do with all your free time when you retire?” asks King. “You will be surprised at all the people who don’t give that much thought. When a lot of people retire, when the novelty wears off, there is a lot of depression. They are used to working 40 or 45 years. All of a sudden, they have all this time. You have to plan out how you will spend your time when you have that much time. Decide what you’d like to do. Make it a part of your written plan.”

This article is for informational purposes only and is not intended to provide any specific financial advice. We encourage you to meet with qualified financial professionals to discuss your needs.