10 Financial Goals Everyone Should Set Before Retirement

In its traditional form, retirement is your time to enjoy the benefits of financial security. You can live your life comfortably, without a job that dominates your time.

Of course, that traditional, carefree retirement isn't an easy thing to create. Most people must spend decades building up their financial security to support the retirement they want. And through that process, it's common to lose focus and take financial detours you will later regret.

The good news is, there's a reliable way to stay focused and minimize those detours: setting goals. Commit to a few long-term goals now and you start laying the groundwork for financial security in retirement.

Read on for 10 financial goals designed to deliver that carefree retirement you deserve.

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Homeownership helps you build wealth now and provides financial flexibility later. When you buy a home with a fixed-rate mortgage, your loan payment remains the same for 30 years. Unless you refinance, that's 30 years with no inflationary increases to one of your largest living expenses. You don't get that perk while renting.

Meanwhile, your property will appreciate. Your home equity value increases as you pay down your mortgage debt. Appreciation expedites that growth in home equity.

Home equity is useful later in life because there are various ways to liquidate it. You can borrow against home equity or sell your home and buy a cheaper one. Those options are nice to have in your senior years, especially if you ever need to raise cash fast.

ALSO READ: Home Equity Is Up Across the Board. Here's What That Means for You

Credit card debt depletes your wealth. These balances continually accrue interest at rates far higher than what you're earning in a cash savings account. Over time, your cumulative spend on interest could be staggering.

Plus, the ongoing interest charges consume cash that could otherwise cover living expenses or fund retirement contributions. In other words, having that debt roll over month after month makes it harder to reach all other financial goals.

Once you transition to a fixed income in retirement, covering interest charges while finding extra cash to pay down your balances will be far more difficult. Do the pay down work now, so you won't have to later.

You might be managing your finances today without a budget. Many people do. You try to live within your income and you're sometimes successful. When you do overspend, you use credit or cash savings to fill the gap.

That system can be functional while you are working. It's far riskier once you retire. Before retirement, you earn pay raises and, possibly, bonuses. Those boost your income, make it easier to pay off debt, and mask overspending.

The income increases you earn in retirement will be mostly offset by corresponding inflationary expense increases. For that reason, you must be precise about how you spend your money. That's why budgeting is an invaluable skill to learn before you retire.

ALSO READ: The Complete Guide to Budgeting Methods

You can save for retirement without any confidence or skill as an investor. All it takes is a good 401(k) plan and regular contributions.

Still, proficiency in investing basics can benefit you greatly in retirement. During the 30 or 40 years you are retired, your financial goals will evolve. Having a good grasp of concepts like investment risk and asset allocation can help you manage through those changing needs with confidence.

Even if you enlist the help of a financial advisor, you will ask better questions and make better decisions when you have investing know-how.

You may have heard the oft-quoted advice about emergency funds: The target goal is a cash savings balance that'll cover three to six months of your living expenses.

Knowing that advice and being able to implement it are two different things. This is a skill to practice now, while your work income gives you flexibility to make mistakes.

Start by budgeting a monthly deposit into a cash savings account. Let those deposits pile up over time. If you reach your target goal, redirect the deposit into your retirement account temporarily. The moment you tap those funds for an emergency, you'll want to turn the deposits back on and top off your balance.

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Wondering how much you need to save for retirement? You could run a bunch of scenarios using lots of assumptions, but I'll spare you the trouble. Shoot for a savings balance equal to 15 times your annual salary. If your lifestyle doesn't expand substantially, that's a good starting goal for a comfortable retirement. You can refine that number later as you build momentum in your savings.

What's important is that you start investing now versus waiting because you're unsure of the endgame. Why? Because earnings potential in your retirement portfolio is highly dependent on how long your money is invested.

The sooner you get serious about investing in your retirement account, the easier it'll be to reach (and surpass) that 15 times goal.

ALSO READ: How Much Do I Need to Retire Comfortably?

The more cash income you have in retirement, the less reliant you are on selling assets to pay your bills.

Selling assets isn't automatically a bad thing, but it does reduce your future earnings potential. It also exposes you to timing risk -- meaning you could sell the day after the stock market crashes. In that scenario, you'd raise less cash from the sale, solely due to timing.

On the other hand, if you could cover your bills with Social Security and reliable dividend income, you'd only rarely have to sell securities. You could sit on the bulk of your wealth as a security blanket and, eventually, leave it to your loved ones.

Vanguard estimates that you'll spend between $3,400 and $7,500 annually on healthcare in retirement. Multiply that by 30 years, account for healthcare inflation, and your cumulative spend stretches up into six figures.

Contributing to a health savings account, or HSA, can help with these expenses, because you can take tax-free HSA withdrawals for healthcare costs. You're eligible to contribute to an HSA if you have a high-deductible health insurance plan, or HDHP. You can verify this with your benefits administrator or your insurer if you have private insurance.

If you can't contribute to an HSA, you could prepare for healthcare in retirement by increasing your 401(k) contributions.

If you have kids, plan for their college tuition early. Waiting too long to strategize on this major expense can easily undermine your retirement. You might end up with debt, or you might pull money from your retirement savings to cover tuition.

The easiest answer is to save and invest starting when your kids are very young. You could also set expectations that the kids will go to junior college and later transfer to a public, in-state university. Or, you could give the kids a budget you can afford. If they prefer a more expensive experience, they can borrow to fund the difference.

Admittedly, these are hard decisions to make. But remember that your future is important, too. It doesn't serve you or your kids to be underfunded for retirement.

ALSO READ: How Much of Your Kid's College Tuition Should You Cover?

Estate planning may feel like something to do later in life. However, like most financial things, it's easier to plan your estate sooner rather than later. Building wealth for any purpose -- to live on or to give away after you're gone -- is always more straightforward when you have time on your side.

Permanent life insurance, for example, has lower premiums if you buy it at a younger age. Likewise, investing to fund an inheritance generates more earnings when you start earlier in life.

Think about what you'd like to leave behind and start planning early. Your loved ones will appreciate it.

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You may not achieve all these goals before you retire. But knocking out a few can enhance the quality of your retirement -- in a big way.

To avoid getting overwhelmed, pick one or two goals to start. Set up processes to position you for success, then move to the next goal.

For example, an easy starting point is rethinking your retirement contributions. Set aggressive contribution rates for your 401(k) and HSA. Put a reminder in your calendar to check your progress every six months. Then, move on to creating a budget that supports your new contribution amounts.

Take it step by step and you can achieve financial security by retirement. Consider it a gift to your future self. You'll retire with confidence about money -- a significant financial milestone in its own right.

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