9 New Year’s resolutions for the nearly retired

Planning to retire in 2018? Then there are some important resolutions you should make now.

At the end of 2016, there were 800,000 more Americans 65 and older not in the workforce (and without a disability), Bloomberg reported — a number that will continue to rise as baby boomers age. About 10,000 baby boomers turn 65 every day, and even though the average age of retirement is rising in the U.S., it still hovers between 62 and 65 years old, according to U.S. Census Bureau data.

So what should you do before you retire? Here are 9 resolutions to consider, according to financial advisers.

Make a plan for what to do with your free time before you retire

To avoid boredom in retirement, start planning seriously for what all that newfound time will mean for you. Consider devoting more time to a hobby, joining a social club, or taking on volunteer work, for example. Liz Revenko, senior financial planner at Mosaic Financial Planning in Berkeley, Calif., suggests mapping out a standard week in retirement — write out what your seven days, morning through night, will look like, adding activities you enjoy and people you like being with. “Resolve to plant seeds now to step into a vibrant retirement, rich with purpose and choice,” she said.

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Practice that lifestyle before retiring

If you’re still working and can’t take a few months off to pretend you’re in retirement, use accumulated vacation or sick time to do nothing but stay in your town, said Andrew Houte, director of retirement planning at Next Level Planning and Wealth Management in Brookfield, Wis. Don’t go on vacation or travel. “Get a sense of how retirement might look and feel,” he said. “If you’re married, what’s that dynamic like when you’re both home for extended periods of time together?” Alternatively, if you plan to move in retirement, you may want to take that vacation — but go to your potential new city during its off-season, such as a beach town during its less busy season or ski area in the summer.

Get the important documents settled

Even at your healthiest, or when you’re struggling to save money, wills and other life documents, such as a power of attorney, are important, especially if you want your wishes to be followed. “Don’t leave your family with difficult decisions and scrambling to piece together your finances,” said James White, a financial adviser and founder of J.H. White Financial in Pottstown, Penn. Know who you want to make the medical decisions, who should be executor of your estate and how to divide your assets. And, though it seems morbid, write out a safely stored document with all the important information you know that your family may need, such as all financial accounts, passwords to social media and other websites and even family recipes they may want, to keep your family’s legacy alive.

Reallocate your investments appropriately

Everyone should know how their investment portfolios are allocated (though 40% of investors do not). General theories suggest retirees should be invested conservatively, since they are no longer generating substantial income and need their assets sooner rather than later. But some advisers say retirees should have buckets of investments, some risky and some safer.

Add a ‘just-in-case’ bucket to your budget

When planning for regular expenses, such as groceries, gas and utilities, rent or mortgage payments, and an emergency fund, don’t forget to include an extra bucket specifically for “just-in-case” situations, said Todd Minear, a financial adviser and founder of Open Road Wealth in Kansas City, Mo. It should be about 10% to 20% above all other planned expenses, and would include unexpected desires, such as a bathroom remodel, new carpet or “bucket list” items.

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Declutter

Getting rid of possessions can be a tedious process, but it frees up space in your home — and could do the same in your mind. “By simplifying your life early in retirement, you’re not only freeing up space in your home, but you’re able to take your time to examine what’s most meaningful to you and release anything that no longer serves you,” said Penny Gordon, senior vice president and private wealth adviser at Gibraltar Private Bank & Trust in East Berlin, Penn. Having a clean slate is just as important as getting your financial house in order, she said (and it could make downsizing homes in the future easier, too). The items that no longer mean much to you may mean a great deal to a family member, friend or charity organization, Gordon added. Some may want to follow Marie Kondo’s method of decluttering, where she puts everything of one category (such as clothes, books or linens) on the floor and picks them up one by one to see which “spark joy” and which don’t. When something is no longer important, you’re supposed to thank the item for its time and find a new place for it (outside of your life).

Prepare to take required minimum distributions

If you’re already retired when you turn 70 ½ years old, you must take required minimum distributions (also known as RMDs). Not all retirement accounts require RMDs, but if they are ignored (or forgotten), retirees could end up paying a penalty fee on top of taxes. Withdrawals typically begin at about 3.6% of assets and increase as a person gets older. For more information on RMDs and strategies to claim them, read here.

Know your benefits

Educate yourself on what your company gives you in retirement, including how your retirement accounts are invested and if you get any health benefits. About a quarter of employers who provide health insurance also offer some sort of financial help with medical needs (though that share of employers used to be a lot higher — 60% in the 1980s). Along with what employers offer, it’s important to know what the government will give you. Social Security benefit checks are expected to shrink in a few decades, because there are more people currently retiring than there are people entering the workforce. If you haven’t already, create an account with the Social Security Administration at My Social Security to ensure work history and personal information is current, view Social Security benefit statements or see what you should expect to receive in the future.

Have money talks with the people who matter to you

Talking about money isn’t always easy between family and friends, but it’s important they know where you stand financially and what — if anything — they should expect to receive as inheritance. Eight in 10 parents do not talk about inheritance with their children, but that lack of transparency could mean poor financial planning for the kids if they expect more than they should — or disappointment, resentment or fights between those left behind.

“Resolve to delve into healthy conversations around money with the people who are affected by your financial decisions,” said Danielle Howard, a financial adviser and founder of financial advisory firm Wealth by Design in Basalt, Colo. That means discussing your financial history, what you hope to do with the money and even what you learned about money, which could help loved ones avoid big mistakes. “As you articulate to people who can learn from you or hold you accountable, you will create financial and emotional wealth,” Howard said.

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