Retirement can be an exciting milestone to look forward to. And if you're planning to retire at some point during the new year, then you may already be counting down the days.
But when you're in that pre-retirement stage, it's important to do what you can to check off the right boxes so you're able to go in prepared. Here are a few important moves to make over the next two months if you're set on retiring in 2024.
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1. Get an estimate of your monthly Social Security benefit
There's a good chance Social Security will end up playing an important role in your retirement finances. So it's important to determine how much monthly income it's likely to pay you.
To get that information, access your most recent earnings statement on the Social Security Administration's website. It should contain an estimate of your monthly benefit.
Keep in mind that if you're retiring ahead of reaching full retirement age for Social Security purposes, you'll face a lifelong reduction in your monthly benefits if you claim them right away. So if you have other income at your disposal, you may want to hold off on filing. But either way, it's important to know what monthly income to expect from Social Security on a general basis.
2. Assess your retirement savings
Hopefully you'll be retiring with a decent chunk of money in an IRA or 401(k) plan. See what your balance looks like, but also, figure out how much monthly income your balance is likely to give you.
If your portfolio has a fairly even mix of stocks and bonds, you may decide to withdraw from your savings at a rate of 2.5% to 4% per year, depending on different factors. So if you have a $1 million nest egg, that's $25,000 to $40,000 a year. You'll want to make sure that income works for you before wrapping up your career.
3. Figure out what you'll do about healthcare
Medicare eligibility begins at age 65. While plenty of people retire at an age when they're already entitled to Medicare coverage, if you're retiring before 65, that won't be the case.
This doesn't mean you can't retire. But it does mean you'll need to figure out what you're doing for health coverage so you're not without insurance. Not having a policy in place could mean facing financially catastrophic bills in the event of an injury or major illness.
You may be able to either hop onto a spouse's group health plan from their job, or extend your own employer health coverage by buying into COBRA for a bit of time. But either way, explore your options to ensure that you have coverage in place. A $7,000 medical bill you have no help paying is not a good way to kick off retirement.
You may be growing increasingly excited about retirement as that milestone gets closer. But to start off a 2024 retirement on the right foot, make these essential moves before 2023 comes to a close.
