Retiring in Two Years? Follow These Tips for Successful Transition

If you’re dreaming of retiring early, here are three tips to consider as you prepare for the next step in your life.

#1: Numbers are important, but just as important is how you want to live your life.

It may seem odd that the first tip has nothing to do with making sure you have enough money saved. Numbers are important, but so is what you want from your post-retirement life.

If retirement means giving up the routine of work and professional life, it’s important to know what fulfillment that work gave you and what that means for you after retirement.

For many people, this means leaving behind titles and career accolades and finding a new or updated identity. Imagine you’re at a party and someone asks, “What do you do for a living?” Think about how, as a retiree, you might respond.

Updating your identity can be both liberating and overwhelming. Before you throw away your current business card, take a moment to think about what you want your next one to be.

If your job largely meets your social needs, figuring out how you can supplement them in retirement is key to your success. Loneliness has been shown to shorten lifespan if left unchecked, so even if you’re not a very social person, it’s important to make plans to socialize.

This could mean, for example, reconnecting with old friends, finding new ones, or building a closer community with current ones.

One of the most disorienting experiences for newly retired people can be the change in routine. With a schedule full of meetings and emails, enjoying a leisurely morning coffee and the paper or a long lunch with a friend can seem liberating.

This may be challenging, but most people need some structure in their retirement days and weeks to feel balanced and fulfilled. Get out a piece of paper and sketch out what a week in retirement will look like. Focus on activities that are fun, engaging, or meaningful.

#2: Save outside of 401(k)s and IRAs.

One of the biggest shocks of retirement is taxes. Once you stop withdrawing your paycheck, you might think you’re almost done.

If you plan to use retirement accounts to earn your own salary, most of that money will likely be tax-free. Before you know it, you might be paying a similar tax rate to when you were working.

It’s not too late to focus your savings on setting aside taxable money to offset pre-tax money. This could be a high-interest savings account, money market, CD, or a tax-deductible investment account (often called a brokerage account).

#3. Test your retirement plans by tracking your spending today.

It’s important to monitor your retirement spending and make sure you can keep it up throughout your life. Record all your expenses before you retire. Use this information to understand what your expenses will be like in retirement.

Tracking your spending before you retire serves two purposes. First, it helps you identify areas where you want to cut spending now, thereby saving you money. Second, it helps you keep your expenses in mind when you plan for retirement.

Second, it helps you see how long your money will last at this level of spending. If you feel overspending and need to make adjustments, it’s better to do so soon after you retire.

Retirement should be your golden years, and with the right planning, it can be. Talk to a certified financial planner to make sure you’re on the right track to a rewarding retirement.