Within 2 Years of Retirement? 9 Things to Do Now

As you get closer to your retirement age, you'll begin to see a shift in planning. Prior to these last two years, you've focused on aggressive investments and long-term savings. Now it's time to review your final goals and make last-minute adjustments to your plans to ensure a smooth transition and stress-free retirement.

If you are just two years out from retirement, here are nine actions to take so you are prepared for when you can finally say goodbye to the world of work.

One of your biggest concerns about retirement will likely be managing your day-to-day finances. Determine how much money you'll need, and categorize your expenses by essential and non-essential needs. Essentials include housing, transportation, food, and health care, while non-essential spending includes travel and hobbies.

Calculating your estimated Social Security benefits can help you determine how much you can expect to receive each month when you retire. Your benefit statement will tell you how much money you can expect to receive if you retire early such as at age 62 and how much you'll get if you plan on waiting until the full retirement age of 67. If your benefits aren't enough to cover expenses, you need to plan now how to supplement that income.

One of the biggest expenses during retirement is medical care, so it's important to make sure you have adequate insurance coverage. You can apply for Medicare three months before you turn 65. The enrollment window ends three months after your 65th birthday. Check with organizations like AARP and the National Council on Aging to receive help understanding your Medicare benefits.

Consider working with an attorney or tax advisor to review and update your estate plan every three to five years. Retirement planning is the perfect time to ensure all your legal documents are in order, including your will or living trust, power of attorney, and health care directives. Make sure all these important documents reflect your current wishes and personal circumstances as you near this new stage of life.

As you approach your retirement date, you may decide you want to shift your portfolio from aggressive growth to a more conservative allocation that focuses on maintaining and generating new wealth. Whether you're rebalancing a current portfolio or building one for the first time, it's important to speak with a financial advisor to prepare for your retirement years.

Before you retire, focus on eliminating high-interest credit card debt and loan payments that will eat away at your retirement income. A good first step is to list your debts and begin to eliminate them by making extra payments. For instance, you may start with the largest open accounts and work your way down. The goal is to be debt-free when you enter retirement.

As you approach your golden years, consider where you want to live in retirement, taking into account factors such as how close you want to be to friends and family, the climate, the cost of living, and additional amenities. Weigh the pros and cons of staying in a familiar community or traveling to a new location, and you may also have more savings if you sell your current home and downsize to a more affordable city.

Now is the time to test your retirement income and budget. The U.S. Department of Labor offers several worksheets to help you plan and determine your retirement budget. However, it can be useful to see it in action. Try living on your projected retirement income for several months to ensure your projections are realistic. It's easier to make adjustments while you're still working.

One of the smartest moves you can make two years before retirement is to consult with a retirement planner. Using a professional's advice, you can make confident decisions on where to put your money, how to plan your savings, and gain peace of mind that your retirement will go smoothly.

Retirement planning isn't a one-time thing. It requires an ongoing effort for years before the day you finally say goodbye to your workplace, especially if you want to figure out whether you can retire sooner. With 70% of recent retirees expressing concern about rising cost-of-living eating into their savings, the final two years should be a time to finalize your budget, review your health care and Social Security strategies, and eliminate risks.

When planning for retirement, it's also important to align your plan with your spouse or partner to ensure your expectations match your shared lifestyle and goals.