Successful Retirees Take These 12 Steps 12 Months Before Retiring

Retirement can be an exciting change in your life, but it's crucial to make sure you're financially ready to make that jump.

Luckily, there are things you can do now to put you on the road to a stress-free retirement when you're a year out.

Here are 12 essential steps to add to your financial checklist so you can enjoy your last year of work and prepare to retire.

Find Out: 7 must-do things before 60 for a stress-free retirement

1. Review your financial portfolio

It’s great if you have a retirement stock portfolio you’ve been reviewing to prepare for retirement, but what about your other financial positions?

Review your complete financial picture, including any debt like a mortgage, car loan, or personal loan. You should also take into account other asset classes like real estate. And remember to account for all your savings, including your emergency fund.

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2. Take inventory of your income sources

When you retire, you’ll have to rely on different sources of income that you’ll need to make sure are in place now.

The first thing to consider is your 401(k), but you should also remember that things like investment properties and stocks, for example, can pad your income.

And remember to think about those potential side hustles you might want to take on for extra income when you retire.

3. Figure out your Social Security strategy

Social Security is also an essential piece of your financial portfolio, so you should start thinking about decisions you’ll need to make, such as when you want to start collecting Social Security .

The longer you wait, the more your monthly payment could be, but you’ll need to balance that with how much you’ll need each month to cover your costs.

Pro tip: The Social Security Administration has a calculator that can help you estimate how much you can collect each month based on when you plan to start collecting your funds.

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4. Consider working part-time

Just because you’re retiring doesn’t mean you have to stop working altogether. Instead, you may decide to pad your income with a part-time job to have some extra income just in case.

Or perhaps you have a hobby you’ve wanted to turn into a side hustle to bring in some extra cash. Consider these other work ideas when planning your retirement, especially if you plan to retire early and could have plenty of years to fill with plans.

5. Research health insurance options

If you’re 65 or over, you can easily tap into Medicare as part of your health insurance plan. But remember that it may not cover everything, so factor in how much you may have to pay out of pocket for items or what kind of supplemental insurance you might want.

If you’re retiring before you turn 65, you’ll have to find private insurance or another plan to help you get the health care coverage you need before you reach Medicare age. So remember to factor any insurance costs into your budget.

6. Pay down debt

You don’t want your debt haunting you when you’re no longer working and eating into your retirement savings, so try to crush any debt from your balance sheet before you retire.

You may want to carry your mortgage into retirement and include it in your monthly budget, but pay off other debt like credit cards, student loans, and maybe even your car if you can afford it.

7. Create a retirement budget

Do you know how much you expect to spend each month in retirement? It’s important to know what your estimated budget will be each month for everyday expenses, as well as potential one-time items like travel or spending more on dining.

Consider all your potential income and expenses, such as car payments, home bills, and other items that may cost you money even when you’re no longer working.

8. Talk to a financial advisor

A financial advisor can help you get your retirement plans in order before you stop working to ensure you’re ready to retire.

One thing to consider is rebalancing your portfolio to account for your age. In addition, you’ll want to be in less risky investments to weather any significant fluctuations in the market. And check over your investments to ensure they’re the right ones for you.

9. Top off emergency savings

Emergencies won’t go away when you retire, so make sure you’re prepared for them with a fully funded emergency account.

You’ll want to consider issues like health emergencies, car issues, or major home repairs that will need to be covered in case something happens.

10. Create a daily retirement schedule

You may have some goals in mind when it comes to what you’re going to do when you’re retired. Perhaps you have a list of places you want to visit or things you want to do. But what about all those days in between your vacations or fun events?

Think about how you want to spend your daily retirement days to get the most out of your retired life. You might want to volunteer or pick up a new hobby, for example, to keep you busy and your mind sharp.

11. Cut your current expenses

You should have an estimated budget for retirement expenses. Still, a year before you retire is also a good time to ensure you have a daily budget and that it’s been updated to reflect your current financial situation.

Factor in your daily expenses and see if there are ways for you to cut some cash off your spending now to get you into good habits for when you retire or help you save extra money for your retirement fund.

12. Make major home repairs

Home repairs can take a good chunk of your retirement budget if you’re not prepared to cover things like a new roof, new furnace, or major fix.

It’s better to make those repairs now when you’re still earning an income so you can cover them with your current cash rather than dip into your retirement savings later if your furnace goes out or your roof starts to leak.

Bottom line

It can be daunting to prepare for retirement now if you still have a year left, but making plans today can help you succeed when you come home from your last day at work.

Remember to create an estimated retirement budget and revisit it regularly between now and your retirement in case of any additional changes as you get closer to your retirement date. You may even find you’re able to retire earlier than you expected .

Money tips that can work for everyone

No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.

Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.

Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.

Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).