While 10 years may seem like a long way down the road, it's also the home stretch if that's when you plan to retire. And like any significant life event, the transition is smoother when you're prepared.
Below are five ways to get ready for that big day that marks the beginning of the rest of your life. Even if you feel well-prepared, overcoming complacency and actively pursuing these strategies can make a huge difference over the next decade.
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1. Aggressively bolster your savings
Take advantage of time and the magic of compound interest and growth by aggressively building your retirement nest egg now. Conventional wisdom says you should save 10% to 15% of your income for retirement each year, but aim for a higher target if you can.
This year's maximum contribution for 401(k) plans is $30,000 if you're over 50 ($22,500 for everyone, plus the $7,500 for catch-up contributions). The limit calculations are a little more complicated for self-employed people but the point remains the same: Max out your various retirement account contributions where possible.
2. Pay down debt and target expenses
A debt-free retirement, or something close to it, can increase your flexibility and lower your stress when the regular income stops. Try to pay off auto loans, credit cards, and other liabilities as much as you can before the big day arrives. That said, your focus should be on paying off the highest-interest debt first.
That's a big step toward lowering expenses now so you have more later. Look for other ways, too. It'll all add up for when the paychecks stop, giving you extra breathing room for any unexpected spending.
3. Craft a written plan that reflects your expected lifestyle and expenses
A written plan is a great way to keep track of and accelerate your progress. Do it yourself or work with an experienced financial advisor to line up your expected savings and income against your expenses. And, of course, include some margin for surprises.
Then, rinse and repeat each year. Your needs will change and expert guidance can help ensure you use your retirement savings and income -- including Social Security -- as efficiently and effectively as you can.
And, speaking of planning, consider what you want to do with your newfound time. Travel? Pursue a hobby? Relocate? All of the above?
Including those considerations in your personal plan will help give you confidence and peace of mind as you pursue your 10-year goal.
4. Consider your health and health insurance
A backdrop to all this is your healthcare and what that will cost. Of course, that's hugely variable but certainly expect healthcare to be one of your most significant expenses during retirement.
Now is a good time to begin considering what Medicare and its supplements can provide when you hit 65. Look at your current plans, and consider long-term care insurance as well. It may cost much less now than later, and way less than if you find yourself in that situation years down the road with no coverage at all.
Being informed and making necessary changes now will save you from unwanted surprises when your regular employer-provided insurance is no longer available.
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5. Stay engaged now for what comes later
Resist the urge, if you have it, to mentally check out from your work. You still have a decade to continue building on your sense of fulfillment and connection to your career.
And perhaps as much as ever, don't be averse to reinventing yourself once (or twice) more in the intervening years. New technology like artificial intelligence appears poised to quickly change the nature of work for millions. Learn and adapt.
Doing that, and maintaining your professional relationships and contacts, could provide fulfilling post-retirement work options if you desire. Or it might just boost your ability to give back and pay it forward in other ways.
I'm evidence of that. I plan to continue my work as a writer for as long as I'm able. And I can tell you that two of my best clients are people I worked for full-time in the past, including the company from which I formally retired. These are rewarding relationships, both personally and professionally. Don't burn bridges.
Sustained action now will sow the benefits later
Dreaming about your "second act" is fun and essential, but turning those dreams into reality requires proactive measures. By mapping out your finances, health, and lifestyle aspirations now, you'll ensure a seamless and rewarding transition that comes with leaving the workplace on your own terms.
