12 Steps to Take 6 Months Before You Retire

EP 47 - 12 Steps to Take 6 Months Before you retire

 [00:00:00] welcome to the show. I'm thrilled to have you with us today. We're going to start today with a voicemail we received from one of our listeners.

Ralph, I am really enjoying your show, and I am doing what you asked, and I am sending you a question. I am thinking about retiring later this year, and I want to know what are some things that I need to think about before I decide to actually retire. I heard your podcast about some situations that I want to avoid, so I want to make sure I am doing all I can to do it right.

It's a scary thought, and I need some reassurance that I am making the best plans to set myself for a successful [00:01:00] retirement. Thank you, Ralph. I will be listening for your guidance. Take care, and God bless.

Well, I really appreciate that voicemail. And we're going to

tackle that topic today. We're going to talk about?

12 steps. That you should take six months before you retire. So, grab your favorite beverage, find a comfortable spot, and let's get ready to discover some key actions you can take. To prepare yourself for a successful retirement.

Again, thank you for joining us.

We're going to have more information. In our notes and you can find

those notes@askralphpodcast.com. Our goal today is to give you some concrete steps. You can take to step into retirement with confidence.

You know, we all plan for this chapter of our lives and we want to make sure we're doing it right. It can be a time to relax, pursue our passions, and enjoy the fruits of our labor.

But in order to make that happen. We need to make sure we prepare accordingly. So we're going to answer the voicemail today that was left for us.

And we're going to talk about 12 [00:02:00] concrete steps that you can take. To make sure you're getting ready correctly in retirement.

And let's start with step one and that's evaluate your financial situation.

And this is tough work folks. You really have to have a, I'll use the word, come to Jesus. Meeting with yourself. And really take stock of your current financial situation and you can't. put rose colored glasses on when you do this. You've got to take a look at your savings. You gotta look at your investments, and your retirement accounts to determine if you're on track to meet your financial goals. and to be blunt. This is tough work.

 this is where you really need to sit down with a financial advisor. I'm hoping at this point of your life, you already have a financial advisor. If you don't. It's definitely time to enlist the services of one. And sit down with them and talk about. What your retirement looks like. This is a crucial step in the process.

If you don't do this, I think you're going to be in for a rude awakening. Yeah. That's assuming that you haven't planned well, [00:03:00] if you plan, well, it could be an excellent meeting.

Let's move on to step number two.

And this one, I can't stress enough and that is create a budget for retirement. And to be blunt, I would probably do that before you met with the financial advisor, because you need to go into that financial advisor meeting, presenting the financial advisor with what your expenses are going to look like in retirement. And what their goal is to take a look at everything you've got saved in your different, you know, maybe you have a pension, maybe you have social security. You might have some retirement savings, you might have some post-tax retirement savings, all those types of things that are going to look and say, what can you afford to take?

 how long can you live based on the retirement nest egg you've set aside. and you really need to sit down and consider, what is your expected income?

 like I said, that could be social security. I'm hoping that's not all of your retirement income, but at least part of it. It could be a pension, maybe you worked for a company that had a pension or you had a 401k, maybe you've put money into IRAs. Or it could be something as simple as you've got, investment [00:04:00] portfolio set aside for these things. And then you're going to have to really take a hard look once you meet with that financial advisor. And revisit that budget and say, maybe I've got to trim some fat here. because the goal is at the day of retirement, figuring out a way to get you through to how long you expect to live. And not die penniless and that's tough.

 that's where the hard work comes in. I meet with clients frequently, they come and meet with me and they say, Ralph, I'm thinking about retiring, what are the things I can do? And I'm going to point them in direction of these things. We're going to talk about today.

So, like I said, first number one. Evaluate your current financial situation. And then number two, get into a budget situation where you're looking at a budget and figuring out, what can you afford to do? And I think you've got a partner. With a financial planner to do that step. So let's move on to step number three.

And this one is, consequential.

And in fact, I just had a client meeting last evening and we were talking about in retirement, how much we're spending on healthcare.

step number three is assess your health insurance options. The [00:05:00] truth is folks. When I meet with clients. That are retired. The number one. Area where they're spending their money is on medical.

Now that could be insurance premiums that could be on prescriptions that could be on, tests and all those sort of things. But. This is something you really need to pay attention to. And you've got to assess, what are the options out there that you can set yourself up for insurance, research and evaluate your health insurance options.

That includes Medicare and make sure you have enough coverage for your medical needs. You might also consider talking to a healthcare specialist or an insurance advisor for guidance.

So once you've covered those things, let's move on to the best way to maximize your social security benefits. And listen, I'm not going to be able to cover that topic in today's podcast, but I've done some other podcasts about that.

And in the show notes, I have some information about the other podcasts we've done. Oh. And while we're there, let me remind you. So if you go to ask Ralph podcast.com, you will find all of our episodes as well as show notes for each of the episodes.

So let's move [00:06:00] on to step number four and that's maximize your social security benefits. You need to review your social security benefits and determine the optimal time to start receiving them. Now. That's not a simple answer.

I get that question quite a bit in my practice to, you know, Hey Ralph, listen, I'm getting ready to retire. I want to retire 62. Like I've really planned well for retirement. So I'm thinking about getting my social security early so I can really just let, go and enjoy. Well, here's the problem with that. And most people don't know this. You have three basic dates when it comes to social security. You have age 62, which is when you can start to collect social security benefits. That's an early date.

You also have your full retirement age, which is based on. Your date of birth for most people that 67 years let's use that as our example. And then you could also wait until like age 70, if you wanted to take it. So you've got to look at, what is your true life expectancy? look around at your family.

If you're the oldest person. In your family. this may be a sign that you might want to take your social security early, but if you have aunts and uncles and moms and fathers [00:07:00] and all that who are living into their nineties, It might make more sense to hold off on that. Now of course, all of this is based on your financial needs. You also have to consider spousal benefits. But you need to think about this because maximize your social security benefits can provide a stable income stream throughout your retirement years.

You don't want to miss out on that. So, like I said, I've done other podcasts on this. I would go listen to those because that's a whole topic in itself, but it's part of this discussion today.

So step number five.

Evaluate your housing situation. Now I'm going to give you some personal, real life situation here. My mother passed away this past March. And that was a tragedy, but the good news about that is she really had prepared herself for the inevitability of getting older. And that's something you need to look at here.

You need to assess your current housing situation and determine if any changes are necessary. This is the time to think about downsizing. Relocating, or renovating your home. Because it might not be suited [00:08:00] to your retirement lifestyle. my mother, for example, she still had her, bed quarters on the second floor of her house.

And I said to mom, I said, listen, I really think you need to start thinking about, moving into a house where at least you have your, bedroom on the first floor because. as you retire, those steps are going to be crippling to you and, you know, and it was a, it was a problem.

 that's something you want to think about. You also want to think about, do you want to look at a 55 and older community? You also want to think about, downsize. Do you need that big house? when you're looking at your budget, does it make sense to spend so much money on housing?

So you might look at some option there. a lot of my clients actually move from state to state because it could be that they move into a state that has. less taxable situations for their retirement. Or maybe no state income tax at all, or maybe they move closer to family.

And that's a big part of that too.

Let's move on to step number six, and that is developing a retirement income strategy.

You need to develop an income strategy to align with your financial goals and risk tolerance. That's true of any kind of investment decision you make. Everyone has different [00:09:00] goals.

Everyone has different risk tolerance. And like I talked about before, this is something, I think you're going to work with your financial advisor with, and in that meeting, you're going to involve, a discussion about your pensions, your investments, your rental income, part-time work, It's not unheard of to go and do some part-time work. A few weeks ago, I did a podcast on

 10 myths of retirement. So it's an opportunity to go back and revisit that. And if you think this out and plan it well, it's going to ensure that you have steady cashflow during your retirement years.

Now let's move on to step number seven. And this one. Is one that a lot of people don't think about. And that is you have to review and update your estate plan.

You have to take the time to review and update your estate plan, including your will. And any trusts, or beneficiary designation, so many times in my practice, I meet clients who overlook, naming a beneficiary on a particular investment, and that can cause significant tax issues. [00:10:00]

So you need to think about that, go sit with an attorney. We did a podcast episode a few weeks ago with, Kevin Baird. He's an attorney here in Dover, Delaware. And he provided some great guidance. And, I'll mark that, podcast in the show notes. If you want to go back and listen to that. Because he really provided some excellent guidance, but this is the time when you're six months out ahead of retirement.

This is a great time to think about updating your state plan, because things have changed and you might want to make different decisions. And like Kevin talks about in that podcast episode. this is a way for you to control something that may not be controllable. you can't control when you're going to pass away. For the most part, but you can't control how things are going to be played out one shoe. Get to that point.

So let's move on to step number eight.

And that's considered long-term care insurance.

I will be doing a podcast on this very topic in the next couple of weeks. So in general long-term care expenses, this is what really affects people who have retired. So there's options out there for this, and I'm not an insurance expert, so I'm not going to sit here and tell you about, this long-term care policy, this long-term care policy, [00:11:00] but it's something you need to consider as you're looking forward to retirement. evaluate your need for long-term care insurance to protect your assets. And provide for your care needs.

There are different policies. so again, you might want to meet with an insurance professional to find the right coverage for you.

And now let's move on to step nine.

And this one is unfortunately something I see in my practice quite a bit. And that is. Pay off high interest debt. If you're getting prepared for retirement, the. The one thing you don't want to do. Is go into retirement with high interest debt.

If you have high interest debt, such as credit card balances, personal loans. You need to focus on paying them off before you retire.

I'd even be so bold as to say, I would not advise going into retirement. If you have any high interest debt, that's the time where you need to work and get those things paid off because that's going to put handcuffs on your retirement. Earnings and your financial freedom. So develop [00:12:00] a repayment plan. And I'm going to plug my book here.

I wrote a book a few months ago called mastering your finances. You can find that on amazon.com, That's Ralph Estep. go on Amazon. You type in Ralph Estep and you'll find my book and it's mastering your finances. And it's a really, it's a brief book. It's 47 pages, but it will give you an idea how to get yourself out of debt and put yourself onto the right path.

Now, this is critically important. If you're looking at retiring soon. Because you don't want to go into retirement. I had met with a client a few weeks ago, to do some financial counseling and I think they were in their seventies. I don't remember exactly. And we were going through what we do. when I meet with somebody do financial counseling, we sit down and we go over all of their bills.

We go over where they're spending their money. And they had just refinanced their house. Now I understood why they did it. They had a bunch of credit card debt and all this sort of things. They refinanced their house to a 30 year mortgage. So here they are, 72 years old. If I remember correctly, don't don't hold me to that.

Exactly. And they refinance their house for another 30 years. Now [00:13:00] in their particular case. That wasn't a terribly bad idea because they paid off a bunch of high interest debt. And they've got a smaller payment, but again, this is something you need to plan for before you get to that point of pulling the trigger on retirement, because you don't want to walk into retirement with all this debt.

This is a time when you want to enjoy, but that financial freedom is so important.

So let's move on to step number 10. And that is plan your retirement lifestyle.

Now, this is the fun part. This is where you can take some time to envision your retirement lifestyle. plan for your activities and hobbies that you want to pursue. That might include travel. Volunteer work, continuing education.

I've had many clients that have retired and gone back to school and gotten another degree. And the cool thing about that is there are universities out there. That will actually give you free education. Once you reached a certain age. You might start a new business. you might look for some sort of, we call a side hustle or something just to keep yourself occupied.

Cause that's one of the things I talked about in my, 10 myths [00:14:00] of retirement or people get to a point of being retired and they look around like, what am I going to do now? I've seen that in my own practice. I've seen clients come back after the retire and say, Ralph i'm bored, I need to do something. So that's something to consider you, having a clear vision of your retirement lifestyle is going to help you make the most of this new, exciting phase of your life.

 you have to have a vision. I talk about that a lot. A vision of what this looks like.

So let's move on to step number 11.

And that is to prepare emotionally and mentally.

I can't stress this enough. Retirement is not just a financial transition. Trust me on this. It's an emotional and mental transition as well. You've got to take the time to prepare yourself emotionally for the changes that retirement brings.

Think about building a support network with friends, family. maybe a higher retirement coach. To help you navigate a situation. Cause listen, folks, this is not for the faint of heart. This is not easy work. It might seem like, oh, [00:15:00] I can't wait to get to retirement. And a lot of people feel that way.

And that's fantastic if you plan well, enjoy your retirement. But think about how that's going to impact your life. It's not as simple as well. I'm not going to go to work anymore. So sit down, put together a plan, take the time to prepare yourself emotionally for the changes that retirement brings.

And last but not least step number 12. And I, and this one is. It's just the key to the whole thing. Enjoy the journey.

Remember. Enjoy the journey. Retirement is a time to relax. Explore new opportunities, and spend time with your loved ones. It's time to embrace the freedom. And possibilities that retirement has offered.

And most of all, enjoy this new chapter of your life.

So, just to recap, we talked about the 12 things you should do six months before you retire. And I'm going to go down through those one more time. And like I said, there'll be in our show notes@askralphpodcast.com. That's evaluate [00:16:00] your financial situation. Create a budget for retirement. Assess your healthcare options. Maximize your social security benefits. Evaluate your housing situation, develop a retirement income strategy review and update your estate plan. Consider long-term care insurance pay off high interest debt. Plan your retirement lifestyle. Prepare emotionally and mentally and last but not least enjoy the journey. And, and that's true of all things in life.

You need to enjoy the journey. So again, thank you for joining us today. If you have an opportunity, go to our podcast page, leave us a message like our listener did today, and maybe you'll be on our show.

I always tell you this at the end of the show.

Stay financially savvy folks. Plan for retirement and enjoy the time. And God bless you. [00:17:00]