Retirement rarely happens by accident. For most people, finally leaving work for good is the result of a slow climb – a climb where specific moves are made to ensure financial resources are sufficient – and tucked away somewhere safe.
If you’re on the fence about retirement and fairly sure you’re ready, now is the time to start putting things into motion. With a few smart steps, you can not only prove you’re ready to retire, but ensure your retirement is actually enjoyable and free from worry and stress.
Is retirement on your agenda this year? Here are six important action steps to take today:
#1: Identify your retirement goals and assess your income.
Obviously, the biggest worry most retirees face is whether they have enough money to live on. How much money will you receive in the form of retirement withdrawals, pensions, or social security? How much cash do you have stashed away in the bank, and how long will it last?
In addition to tallying up your retirement income, it helps to list out your retirement goals. Can you afford to realize your dreams in retirement?
“Identifying your goals will help you determine what your target income ought to be in order to fulfill your objectives,” says Orange County Financial Advisor Tony Montenegro. With a handle on your income and your retirement goals, you can determine whether your savings are enough to make the type of retirement you wished for a reality.
#2: Create an actionable retirement plan.
“Develop a personalized financial plan,” says California financial planner Joseph A. Azzopardi of The Well Planned Retirement. Ideally, you’ll want multiple income streams that afford you a comfortable retirement, but also as few expenses as possible.
As Azzopardi notes, it's too easy to overlook the small things that can have a tremendous impact on our financial lives in the long-run. “Taxes, inflation, longevity assumptions, medical care, and estate planning are the most common items I see clients overlook when reviewing retirement plans.”
While it’s possible to work through your income and goals yourself, sitting down with a financial planner can also be a smart move as you approach retirement. If you’re unsure your money will last, a financial advisor can give you a definitive answer.
#3: Dial down your spending.
Our second tip goes hand-in-hand with our first one. As you consider how much money you’ll have to spend in retirement, it’s equally important to create a budget that actually works. From there, you can compare your planned monthly spending to your income. And if the numbers don't match up and you anticipate a cash shortage in retirement, you’ll need to find ways to dial your spending back.
“Many people still do not know exactly where all of their money goes, but it’s a critical and simple first step for any pre-retiree,” says Texas financial planner Shane Sullivan of Escaping Financial Gravity.
While budgeting may sound complicated, it's only as hard as you make it. To create a simple starter budget, take a sheet of paper and create two columns. Write all your income streams on one side of the page and all your fixed, estimated, and fluctuating expenses on the other. Compare figures (income vs. expenses) to see where you stand. Then, look for expenses you can cut once you retire.
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Sullivan also suggests living on your “retirement budget” for a few months before you pull the trigger.
“There may be some uncomfortable adjustments you need to prepare for now to make sure you’re ready to go,” he says.
#4: Dial down your investment risk.
According to Colorado financial advisor Matthew Jackson of Solid Wealth Advisors, future retirees need to take a close look at their investments within a few years of retirement. That way, they can transition at least some of their retirement savings from accumulation strategies, which often involve risk and uncertainty, to preservation strategies intended to preserve capital.
Perhaps you’ll want to buy an annuity for guaranteed income, or simply move the bulk of your investments from high-risk funds to new options with less risk and volatility.
“Being heavily invested in the stock market could be a recipe for disaster if there is an unforeseen correction in the market,” says Jackson. “And no one wants to have to go back to work because of a loss of retirement savings.”
While none of us have a crystal ball, we do have the ability to secure assets from big losses. “In this day and age, you don’t have to sacrifice good returns for safety,” he says.
“It is possible to secure a large chunk of your savings and still have a good return.”
#5: Create a plan for your time.
While some people assume retirement will be absolute bliss, many new retirees find they have too much idle time on their hands, says Albuquerque Financial Planner Jose Sanchez.
Sometimes, leaving work creates an “unexpected void” that can leave new retirees depressed and anxious for something to do.
“Don't let the success of retirement be an empty victory,” says Sanchez. After the initial excitement of retirement dies down, you’ll need something to do.
To plan a retirement that provides your life with substance, you should come up with a list of activities to dive into. Ask yourself, “What am I retiring to?”
Perhaps you can work on a passion project part-time, volunteer for a cause you care about, or perfect a new hobby. Whatever you decide, make sure you plan activities that will give your retirement substance.
You have all the time in the world now. What will you do with it?
#6: Learn about Social Security and Medicare.
As your approach retirement, it is important to get a handle on the type of benefits you may qualify for. Create an account at www.socialsecurity.gov and start to familiarize yourself with the site’s benefits calculators.
“And while you are there, remember to print off your benefit statement,” says financial planner Benjamin Brandt of retirement podcast Retirement Starts Today Radio. “Paper statements stopped in mid-2011 & started up again in Sept of 2014.”
Have a pension or other employer-sponsored benefits? Check on your spousal and health insurance-related options. Meanwhile, it's equally important to learn about Medicare Supplement plans and your options there as you approach age 65.
“Knowing your benefits is a crucial step to building a comprehensive retirement income plan,” says Brandt. Even if you don’t yet qualify, it’s important to know how all your retirement benefits will work together in future years.
As always, the best way to plan is to plan ahead.
This originally appeared on U.S. News.