According to an article from The Wall Street Journal, the United States is entering a potential retirement boom. Approximately 4.1 million Americans will turn 65 this year, and millions more will join them over the next several years.
But turning retirement age isn't the same as feeling ready for retirement. So, if you're hitting the golden milestone this year or soon, you need to know some essential retirement tips.
Make sure your retirement plan checks these five boxes.
1. Establish a budget
Retirement can feel as intimidating as it is exciting. You've probably lived most of your life with the financial backing of a steady income, but retirement puts you at sea without that financial life vest you're accustomed to. Like a compass to a sailor, a budget will guide your financial journey through your golden years.
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A budget will inform you precisely how much money is coming in and going out of your household. You'll slowly draw on your nest egg to fund your living costs in retirement, which means you'll need to pace your spending so you don't run out of money in your later years.
2. Have healthcare access
Medical debt causes approximately 40% of bankruptcies in the United States, and older people are hit harder than most. Having sufficient access to healthcare is critical to avoiding this financial landmine. If you qualify, Medicaid could be an option for you. It covers some of the most expensive care and services, like hospital treatments, nursing facility care, and home services.
Most people will qualify for Medicare once they turn 65. Enrolling for this is a no-brainer because it's an excellent foundation for general care and needs. It doesn't cover everything, so looking for supplemental health insurance would be a good next step once your Medicare plan is approved.
3. Keep Social Security on your radar
By age 65, about half of Americans have already claimed Social Security. If you're still in the process of deciding when to collect Social Security, remember that the age you claim and your average earnings over your career are the key drivers of how much you'll receive each month.
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Don't hesitate to contact a Social Security official to discuss your benefit claiming options. Social Security is an important source of income for millions of Americans, but it's a complex program. Getting outside help could ensure you get the most out of your claims. The average monthly Social Security check was $1,767 as of year-end 2023, so while substantial, you should combine Social Security with additional retirement savings to sufficiently fund your golden years.
4. Have a last will and testament
This is also the stage of your life when you should have a last will and testament for the benefit of your loved ones. These legal documents specify precisely what's done with your assets in probate following your death. That's not just money and property -- it can also name beneficiaries or legal guardians for underage children.
Without a last will and testament, the laws in your state of residence will determine how your estate is handled instead. The state can go against your living wishes, even if you had vocalized them to someone. Don't put friends or family through the stress of not knowing how the state might award custody of a minor or distribute your assets. A last will and testament prevents all that.
5. Shed the lousy debt
The average U.S. household had $87,000 saved for retirement as of 2022, according to research by The Motley Fool. That means many people could be living on a tight budget in retirement. There's no need to make things harder on yourself, so avoid carrying bad debt into retirement. What's bad debt? Anything carrying a high interest rate, such as credit cards, can be considered a bad debt.
Ideally, you would retire with no debt. After all, the less debt you have, the more money you have for other expenses. Unfortunately, that may not be a reality for many people, so try to at least clear out credit card debt, payday loans, and any other high-interest obligations you might have.
