As the new year unfolds, it’s a great time to reassess your financial goals, especially if you’re nearing retirement. Setting financial resolutions can help ensure you’re on track for a proactive and fulfilling retirement. Here are key goals pre-retirees should consider, along with practical advice to achieve them.
Maximize Retirement Contributions
Now is the time to make the most of your retirement savings. For 2025, the IRS allows individuals over 50 to make catch-up contributions to 401(k) and IRA accounts.
- Action Step: Max out your 401(k) contributions (up to $30,000 if over 50) and consider funding a Roth IRA if your income allows.
- Why It Matters: Extra contributions boost your retirement nest egg and take advantage of tax benefits.
- Resource: Visit the IRS website for updated contribution limits and rules.
Develop a Retirement Budget
Understanding your future expenses is crucial. A clear retirement budget ensures you can sustain your desired lifestyle.
- Action Step: Identify essential and discretionary expenses. Consider healthcare, housing, travel, and hobbies.
- Why It Matters: According to Fidelity, the average couple retiring at age 65 will need approximately $315,000 for healthcare expenses alone.
Pay Down Debt Strategically
Entering retirement with high-interest debt can limit your financial flexibility.
- Action Step: Prioritize paying off credit card debt and high-interest loans. Consider refinancing your mortgage to lower monthly payments.
- Why It Matters: Reducing debt before retirement provides greater financial stability and frees up cash flow for other needs.
- Resource: Talk to your financial advisor to ensure that you are paying off the appropriate debts. Not all debt is bad debt and not all debts are the same.
Review Social Security Benefits
Social Security will likely play a role in your retirement income. Understand how timing your benefits can affect your monthly payments.
- Action Step: Use tools like the Social Security Administration’s (SSA) benefits calculator to estimate payouts. Work with a financial advisor to create a claiming strategy.
- Why It Matters: Claiming Social Security at 62 reduces benefits, while delaying until 70 maximizes them.
Update Your Financial Plan
Your financial plan should evolve as you approach retirement.
- Action Step: Schedule a meeting with your financial advisor to review your portfolio’s allocation, risk tolerance, and withdrawal strategies. If you don’t have one and you are looking for a good place to start, start here.
- Why It Matters: A well-structured plan balances growth and stability, ensuring you don’t outlive your savings.
Review Your Estate Plan
Your estate plan ensures your wishes are honored and provides for your loved ones.
- Action Step: Update your will, designate beneficiaries, and establish powers of attorney for health care and finances.
- Why It Matters: An updated estate plan prevents legal complications and ensures your assets are distributed according to your wishes.
- Resource: Looking for a good resource to protect your estate plan? We know some people and we can help!
Prioritize Health and Wellness
Staying healthy not only enhances your quality of life but also reduces future healthcare expenses.
- Action Step: Schedule annual checkups, stay active, and adopt a healthy diet. Staying active and having an active routine established will be important if you are no longer working when you retire.
- Why It Matters: The healthier you are, the more you can enjoy your retirement years—and potentially save on medical costs.
The journey to retirement is an exciting chapter of life, and making financial goals with the next chapter in mind is a proactive way to prepare. These steps can help you align your financial strategy with your goals and bring ease of mind as you transition into retirement.
“The vision must be followed by the venture. It is not enough to stare up the steps, we must step up the stairs”. - Vance Havner.
The hardest step is getting started. If you aren’t sure where to get started on any of your financial goals or you are looking for an experienced advisor to help you with a strategy for your retirement, get started here and we can see if we may be a good fit for each other!