Within 1 Year of Retirement? 13 Things To Do Now

You've worked hard your entire life, and pretty soon, it will be time to enjoy the fruits of your labor. Getting ready for retirement is exciting, but preparation is critical, particularly in the 12 months leading up to retirement.

This is your last chance to get everything in order, address any shortfalls or blind spots, and start transitioning to a new financial mindset. The following tips will ensure you're ready to enjoy your golden years.

You should review your estate plan every 3 to 5 years. Still, one more review before retirement doesn't hurt. Ensure your beneficiaries are current, review all estate documents, and address any long-term care plans that you might not have included when you started the process with your attorney.

Outdated or incorrect information can create significant hardship and confusion for you and your loved ones.

Assess your life, home, and umbrella insurance coverage. Ensure that your policies still suit your needs. This can greatly reduce unnecessary costs. For instance, you might find that you don't need as much life insurance at this point.

Review your current needs so that you're not wasting money in your golden years.

One of the most common pieces of financial advice is to have an emergency fund. This becomes particularly important before retirement since employment income will soon end.

Keep at least 6 to 9 months of expenses in cash or in a high-yield savings account. This will be your first line of defense against unexpected bills.

With retirement quickly approaching, now is a good time to cut recurring bills. Consider downsizing your home, switching to a cheaper phone plan, and refinancing your insurance.

Lowering these costs means you'll need less income from savings. Smaller bills will also better prepare you for market downturns or unexpected expenses.

There are pros and cons of claiming Social Security early, at full retirement age, or delaying. Delaying will increase monthly benefits, but it could force you to use savings earlier.

You need to make your decision based on health, spousal benefits, and cash flow. Doing so will greatly affect your long-term financial stability.

When you're within a year of retirement, it's time to decide how and when you'll start drawing from your retirement accounts. The order of withdrawals is critical. Start with taxable accounts and move to Roth accounts later. This will affect taxes and your savings' longevity.

Tax efficiency could save you thousands during your retirement years.

More than 40% of retirees carry debt into retirement. However, you should strive to minimize high-interest debt (e.g., credit cards, personal loans, etc.) as much as possible. Debt will eat into your fixed income, leaving less money for essentials.

Start by focusing on balances with the highest interest first. Being debt-free gives you more financial freedom in retirement.

Everything discussed thus far is important, but planning for healthcare needs could very well take precedence. Healthcare is a major retirement expense. Research your Medicare options, premiums, supplemental insurance, and out-of-pocket costs.

You should also factor in long-term care planning. Only 15% of retirees have long-term care insurance, while 80% of 65-year-olds will require care at some point.

Many financial advisors recommend reducing your risk in retirement. You should start focusing on income-generating and low-volatility investments.

However, don't go too conservative. You still need growth, and rebalancing can help align your retirement strategy. Fortunately, you can seek professional help to build the right mix.

Every step discussed here helps you take control of your post-retirement life. However, you don't have to do this alone. Schedule a consultation with a fee-only financial advisor. They'll assess your portfolio along with the risks you face and potential withdrawal strategies.

Professional input at this stage can help you prevent critical mistakes and increase confidence.

Did you know you can make catch-up contributions to some retirement accounts once you turn 50? This means you can contribute a significant amount of money to your 401(k), IRA, or similar retirement plans. This will boost your nest egg and reduce taxable income.

Every extra dollar saved now adds additional security to your retirement finances.

Reviewing reliable income is vital in the months before your retirement. This could include Social Security, annuities, pensions, and other guaranteed income sources. You'll need to compare these expenses to your budget.

Having a baseline lets you know how much you'll need to supplement with savings. This avoids unnecessary stress and encourages smart decisions.

Creating a budget is perhaps the most important thing you should do in the year before retirement. Estimate your post-retirement monthly expenses, including housing, food, insurance, and entertainment.

Knowing your spending will help determine how much income you'll need. Make sure to plan for inflation and unexpected costs.

Even if you did everything right, you shouldn't become complacent in the last year before you retire. Nearly half of Americans will run out of money in retirement. Sadly, this even includes those who invested, saved, and diversified. But this doesn't have to be you.

You reinforce your financial stability when you take these steps in the year leading up to retirement. More importantly, you can identify any shortfalls that may need to be handled. Just a little proactivity can help prepare you for the future.