Hitting your sixth decade of life is pretty exciting. The 60s tend to be when people transition from their working lives to their retirement lives. That's a pretty huge change, and if you lay the groundwork for your retirement a few years in advance, you can minimize the shock of the transition and maximize the joy of your first few years of retirement.
Create a retirement budget
Your early 60s is a great time to start crunching some hard numbers on your retirement budget. You're probably just a few years from your actual retirement date at that point, which means you're close enough to be able to accurately estimate your income and expenses, but far enough away to manage a last-second course correction if the results of your budgeting exercise are horrific. When writing up your retirement budget, remember that most expenses will decline in retirement, but medical expenses will likely go up as you age.
Catch-up contributions
Once you hit your 50s, you can start making supersized contributions to your 401(k) and IRAs, and if you can swing it, it's wise to contribute the maximum amount (detailed here for 401(k)s and here for IRAs) right up to the day when you finally retire. It's true that these last-minute contributions won't have much time to grow before you retire, but they will continue to produce returns during your retirement years. So if you have a long retirement, those extra few thousand dollars may create some pretty impressive returns over the course of your retirement.
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Set the date
By the time you reach 60, you probably have a good idea of when you plan to retire, but now is the time to set that date in stone. One way to make the transition smoother is to switch from a full-time to a part-time schedule rather than quitting your job entirely. If your employer is open to this idea, it can give you a chance to ease into retired life instead of jumping straight into the deep end. Plus, having a little extra income during your first few years of retirement can be a big help.
It's also smart to figure out when you should claim Social Security and factor that into your planned retirement date.
Research retirement living
Let's say that for years, your dream has been to move to Italy when you retire. You've probably done a fair amount of casual research at this point -- read books, perused websites, spoken with people who've lived in Italy, and so on. But now the big day is fast approaching, and before it arrives, you need to confirm that this is truly something you want to do.
In-depth research is a must no matter where you plan to live in retirement -- whether it's a foreign land or a nearby assisted-living community. Aside from obvious factors like the weather, you should also consider region-specific factors like state and local taxes, the local real estate market, proximity to friends and family, access to the kinds of activities you enjoy, access to high-quality healthcare, and any other aspect of picking a home that's particularly important to you.
Much of this information you'll be able to find just by searching the internet and talking to folks who live in your retirement locale of choice. That said, the best way to determine whether a living situation is right for you is to try it on for size before you retire. Tap into your saved vacation time and spend a couple of weeks living as you plan to in retirement. Remember, you'll likely be spending decades in this place, so due diligence beforehand is vital to your future happiness.
Review your investments
Soon you'll be switching over from putting money into your retirement accounts to taking money out. Before that happens, it's important to get those accounts whipped into shape. If you haven't already done so, you should definitely rebalance your investments in preparation for retirement, which typically involves shifting most of your money into bonds, with the remainder in stocks.
You may also want to change the type of stocks you've selected. High-dividend stocks can be useful during retirement because of the regular income they generate. This is also a good time to take your account statements to an investment advisor who has experience in retirement planning and ask for advice.
Decide on lump-sum versus annuity
Most pensions offer you the option of receiving your money either in a lump sum (meaning you get it all the day you retire) or as an annuity (meaning you get a check every month as long as you live). There are arguments for and against both options; your own circumstances will determine which one is the best for you, although for many retirees the guaranteed income of an annuity makes it the better choice. Lump-sum payouts are riskier because it's up to you to use the money wisely. It's easy for retirees to make poor investment decisions or spend the lump sum too quickly and run out. On the other hand, if you're an experienced and disciplined investor, you may be able to put that lump sum to work and end up with more income than you would get from an annuity. Do your research and don't hesitate to consult with your HR person at length -- you won't get a second chance to make this decision, and it's an important one.
Test-drive retirement
Assuming you have some vacation time saved up, consider using it to do a sort of retirement dress rehearsal. Take a couple of weeks off work and spend that time doing the kinds of activities you plan to do once you retire. If you have a fabulous time, then you know you're on the right track. On the other hand, if you're bored out of your mind by the end of the week, you should seriously reconsider how you intend to spend the rest of your life. Maybe you should delay retirement a bit -- or perhaps moving to Europe would be a good idea after all?
