Technically, we are all nearing retirement. But if you're here it's because retirement is within the next 10 to 15 years. Your kids are either out of the house or will be soon.
It's crunch time for your finances. What moves do you need to make? What should you avoid? And exactly how much should you have saved up by this point?
There are many things you should do to prepare for retirement. Make a task list and get started on all these items as soon as possible.
Listen, talking about death isn't exactly fun. Yet having this discussion could ultimately be the best thing you ever do to provide for your family.
You want to have adequate life insurance – especially with a family – to protect against the loss of income from losing a spouse. Term life insurance is inexpensive compared to the benefit you get.
Read this article to learn how you determine how much term life insurance you need to purchase to protect your family: How Much Term Life Insurance Do You Need to Buy?
It's normal to want to provide the best life for your kids. For many that means focusing on college savings soon after a child comes on the scene.
There's one giant problem with this mindset: there are no loans or scholarships for retirement.
Your retirement must always come before setting aside dollars for college. If you can do both, great! But retirement comes first.
The longer your money is invested, the more likely your nest egg will be substantial in retirement. Start now and use catch up contributions where you can.
If you haven't started investing yet, don't worry, I won't yell at you.
You have to start somewhere, and if you've paid off your consumer debt and have some liquid cash in an emergency fund, you're ready to start investing.
There are some great online brokers that can help you begin. Read my article: Ready to Start Investing? Here's the Best Online Brokers for Beginners.
If you can't invest a lot of money at one time, you should be aware that many online brokers – and brokers in general – have minimum investment amounts. Because of this, I decided to ask the Financial Blogger's Conference community their best ways to invest a small amount: $100. Turns out there are lots of ways to invest even a little. Hey, it's something!
Read 16 Ways to Invest $100 and get started today.
Are You on Track?
So, are you on track for retirement? How do your savings compare with others? Great question.
Keep in mind, however, that even if you're doing better than the average saver, it might not be good enough. How do you really know if you're on track for retirement?
Take a look at The Financial Success Blueprint™ which can help you determine if you're on track to have a successful retirement. If you're not on track, it will provide a strategy to get you there.
Also, if you need help keeping track of all your investment accounts in one easy place, you should take a look at Personal Capital. Learn more here: Video Review and Walkthrough of Personal Capital. You can also read my standard review here: Personal Capital Review – Managing All Your Investments in One Place.
Aww, the Roth IRA. It should be like sweet honey on your tongue or music to your ears.
The Roth IRA allows you to pay taxes now so you don't have to pay taxes later. That's a good thing in many scenarios. First, if you expect to have a higher tax rate in the future, then you should definitely pay taxes now on your investment contributions so you don't have to pay the higher rate on that money in the future. Second, the earnings can grow tax-free. Super bonus.
There are some great places to open a Roth IRA – that is, if you know where to look. Just kidding, here's the article: Best Places to Open a Roth IRA.
Invest while you still have some time left before retirement!
Annuities are one of the most complex investment tools available on the market.
Used properly, they offer many attractive benefits to investors.
More from GFC, Below
Used improperly, and investors might find themselves stuck with a lemon.
Click here to get free access to Top 3 Shady Tactics That Advisors Use to Sell Annuities (and how to avoid them). You don't want to buy an annuity until you read this.
Here's the thing about annuities: they're pretty complex. When you add that complexity to a complex financial situation that you might be going through, it can be difficult to know where to start. But I have a solution for you.
Read 15 Reasons Why You Shouldn't Buy an Annuity – (And 5 Real Life Scenarios When You Should). This article will help you sort through the hype about annuities and show you exactly when an annuity would be right for you.
There are all types of annuities, and trust me, it can get confusing. Some of them you'll want to avoid altogether (like variable annuities), and others you'll want to consider.
I break down the different kinds of annuities in: Are Annuities a Good Investment? The Good, Bad, and Real Ugly.
When you buy an annuity, you're going to be paying fees. But some annuities are worse than others when it comes to fees.
For example, I met a lady who paid over $3,500 in variable annuity fees and didn't even know it. You read that right.
Here's the thing: Many variable annuities are sold because of the high commission associated with them. Don't fall for that trap.
When you purchase an annuity – any annuity – make sure you clearly understand how the fees work and what the alternatives are.
Moreover, make sure that your financial advisor listens to your needs in retirement. If they seem pushy about getting you into an investment, fire them and find someone else. You'll be glad you did.
To learn more about how that lady got stuck paying fees she didn't know about, read: How One Woman Paid Over $3,500 in Variable Annuity Fees and Didn't Even Know It.
Debt can ruin your retirement. It's like letting someone strap a 60-pound rucksack to your back and telling you to go run five miles in the rain.
It's miserable. (Trust me.)
Before you reach retirement you need to have your debt wiped out. You've fooled around with it for years. Let's knock it out so you can relax and enjoy retirement when it gets here. Besides, you'll get a guaranteed return on your investment: not having to pay expensive interest to the government or corporations! Bonus!
What's one of America's favorite ways to incur debt? Credit cards. Credit cards are linked with our behavior in so many ways, and it's important to make sure you have them under control (stop going into debt)!
Someone wrote to me to ask if they should pay off their credit cards using their 401(k). I had some explaining to do in this article: Should I Use an Old 401(k) to Pay Off Credit Card Debt? Can you guess what I said?
Instead of using an old 401(k) to pay off your debt, why not use some nifty online tools?
There are a whole bunch of them to choose from so it can get pretty overwhelming. But the important thing is to just choose one or two and stick with them. Over time, you'll pay off your debt and have more money for retirement.
Take a look at some of the best online debt payoff tools here: Online Tools That Help You Pay Off Debt.
While you're not quite retired yet, it's important to start learning about Social Security so you can be prepared.
Before you even think about starting to utilize your Social Security benefits, make sure you know how they work.
First of all, you're going to want to maximize your benefits if possible by delaying the year you take benefits. If you wait, you'll be able to collect a lot more money and maximize your benefits.
Read my article on the subject to learn how: How to Maximize Your Social Security Income (and avoid these 6 costly mistakes).
Yes, spouses can use the benefits of their husband or wife's Social Security. At this point, it's important to know that these benefits exist.
Read more about them here if you're so inclined: Social Security Spousal Benefits Rules: Retirement Income for the One You Love.
More Retirement Information
If you'd like to learn more about how you can prepare for retirement, check out one of my other websites: RetirementByJeff.com.
Also, take a look at The Confident Retirement Toolkit. It will help you prepare you for a successful retirement.
Retire strong. Prepare now!