Are you retiring in the next 5 to 10 years? The ultimate 8 step pre-retirement checklist

Are you retiring in the next 5 to 10 years? The ultimate 8 step pre-retirement checklist

– Paul Damant, CFP (Director, Cornerstone Asset Management and Managing Director, Cornerstone Financial Services Group of Companies)

So, you’re getting close to retirement – an exciting time of much needed and well-earned freedom and relaxation awaits, along with all the other splendours retirement holds. Before you can metaphorically sail into the sunset, there are a few things you need to attend to, to ensure your retirement is as easy and comfortable as possible.

To help you get started, Cornerstone Investment Advisory Services has put together the ultimate 8 step pre-retirement checklist.

1.Get out of debt as soon as possible

First thing first – cut up those cards! Retiring with debt is probably the worst thing you can do. Interest rates on debt (especially credit cards and store accounts) are very high and will take an unnecessary chunk out of your monthly retirement income. In other words, the power of compound interest will be working against you. If you have debt, make sure you try to pay it off before you retire.

2. Create a retirement budget and make sure it’s realistic

With the help of your financial advisor, create a retirement budget – a vital element that will help to ensure your retirement income is well spent. Make sure your budget is realistic and remember to consider the expenses you have now that may not be as large post retirement, for example traveling costs to work etc.

3.Assess your lifestyle and adjust where necessary

Is your post retirement budget not working out? It could be because you are planning to live above your means. Make sure that your retirement lifestyle is line with the amount of savings you have, otherwise you will run out of money much sooner than you think. CSIAS can assist with an illustration (Income Drawdown) which shows how long your money will last assuming a CPI + return which is in line with your risk profile. Based on this illustration, we can adjust your budget to ensure that you don’t run out of money sooner. Click here to get in touch with us today.

4.Consider downsizing your home

As hard as it may be, you may need to consider moving into a smaller home. There’s a good chance you may not need as much space as you do now, and a smaller home may save you a lot in maintenance and other costs. Try to opt for a low maintenance home and a practical location to help you get a good resell value in the future.

5.Increase your monthly retirement contributions to the max

You have a decade or less left to save as much as you possible can for retirement – now is the time to hussle! Increase your retirement contribution as much as you can even though it’s seems as if you have enough saved already. Not only will this increase your tax refund, but it will make a massive difference to your retirement savings and compound interest earnings over the next few years.

6.Make sure that your investments are diversified and focussed on growth

Now that you’ve increased your monthly contributions to the max, you need to ensure that your investments are structured in such a way that you get the best possible returns at the most appropriate level of risk. Your wealth manager will also need to develop a post-retirement investment strategy to ensure that your savings continue to grow even after you retire.  If you are unsure about your current portfolio and how your investments are structured, contact Cornerstone Investment Advisory today to get expert advice.

7.Avoid large luxury purchases

Be careful of purchases that are justified by words like “I deserve this” or “I’ve worked hard and earned this”. Large luxury purchases few years before retiring are rarely a good idea as it bites into a large chunk of your savings. Think very carefully before buying that boat or home by the beach and consider the impact it will have on your retirement savings.

8.Ensure that you have the best healthcare cover you can afford

Your health needs will change drastically as you get older so make sure you have the appropriate level of medical cover. If you can, try to upgrade your medical aid benefit option to increase the level of cover and strongly consider Gap Cover. With a Gap Cover policy, you’ll be covered for any shortfalls on your medical aid often relating to specialist’s costs and hospital co-payments.

If you are unsure how Gap Cover works, click here to read about the many benefits this affordable add-on holds.

If someone you know is close to retirement, feel free to share this article with them. If you have any questions or concerns regarding your retirement planning, get in touch with Cornerstone Investment Advisory Services for expert advice backed by decades of experience and knowledge. Also make sure you follow us on Facebook, LinkedIn and Twitter for more interesting and useful content.

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