If 2024 is the year in which you'll be retiring, you may be counting down to that milestone. And you may be growing increasingly excited about it by the day.
Retirement can bring about a world of financial change since you're going from earning a paycheck to potentially not working at all. So it's important to start off on the right financial foot. With that in mind, here are three key moves to make as soon as you tender your resignation.
Image source: Getty Images.
1. Set up a budget
Maybe you're used to living on a $95,000-a-year salary. Ideally, between money from your savings and Social Security benefits, you'll be able to cover your living expenses in the absence of that paycheck. But it's important to manage your bills carefully to avoid racking up debt or depleting your nest egg too quickly.
Once you're retired and can see what your basic living costs look like, set up a budget so you know what each expense entails. From there, you can assess your spending and make sure the various bills you're paying are ones you should keep. You may, for example, realize that hanging onto your home isn't financially feasible, given your lingering mortgage payments.
2. Decide if you need to claim Social Security right away
Once you turn 62, you can sign up for Social Security at any age. However, you're not entitled to your full monthly benefit, based on your personal wage history, until you reach full retirement age (FRA). You can also delay your filing past FRA for a boosted monthly Social Security benefit, though this incentive runs out as soon as you turn 70.
If you're retiring prior to the age of 70, it pays to assess your financial situation and see if you need to sign up for Social Security immediately. If you don't, then waiting should result in a higher monthly benefit -- for life.
3. Make sure you have health coverage in place
Many people have their health coverage tied to their jobs. Once you resign, though, you may no longer be eligible for health insurance through your employer. It's important to put coverage in place as soon as possible because going without insurance could mean risking catastrophic bills in the event of an injury or illness.
Once you turn 65, you're allowed to sign up for Medicare. If you're retiring before the age of 65, you may have the option to move onto your spouse's plan if they're still working and have health coverage through a job. Or you may be entitled to pay for continued coverage through your employer's plan via COBRA for a limited period.
COBRA can be extremely expensive, though, because you're effectively paying the entire cost of your health insurance without your employer subsidy. It may, however, be a reasonable solution if you're within a couple of months of being eligible for Medicare and don't have a spouse's plan to jump onto.
You may be thrilled with the idea of being as close to retirement as you are, but make a point to tackle these essential moves as soon as that stage of life kicks into gear. That way, you can start on a financially sound note.
