You’re almost there! Just a few more years of working until you finally reach that point of never having to enter another office again. Your time will finally be your own to do with as you please. Sleep in, spend the day golfing, spend your summers in Europe, teach your grandchildren how to bake a cake – anything you want. You’ve done the heavy lifting of saving carefully and investing wisely, but, if you’re like most pre-retirees, there are a few steps you need to take first to reach your goal.
1. Recognize good debt and bad debt – and get rid of the bad debt
Bad debt has no potential for positive return on your investment, like outstanding credit card balances and auto loans. Good debt is paid for something that will increase in value, like your mortgage or a business loan. Make it a priority to pay off all of your “bad debt” as soon as possible so you can take those payment amounts and put them to better use (say, investing or saving).
2. Calculate your retirement readiness with a Pro
Go over your numbers with a professional retirement planner to understand your odds of never running out of money in retirement. You may find that a few minor adjustments are necessary to ensure your best chance of financial security. Achieving a good, solid understanding of your current financial picture and your many options is vital to achieving your retirement goals. From there, you’ll have the knowledge you need to make the best possible decisions for your future and enjoy one of the best times of life.
3. Do the math
What would your financial picture look like if you worked two more years than expected? How would reducing your spending by $5,000 or $10,000 a year affect your lifestyle and long-term financial security? You might also look at the possibility of allocating your investments differently. Don’t wait until you have to reduce your circumstances to understand these numbers.