13 Financial Milestones You Must Reach Before Retirement

There are so many factors to consider as you're planning for retirement, and it can be tough to tell whether you're on the right track. While everyone's situation is different, there are a few milestones you should reach before you even consider retiring.

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Long before you retire, you'll need to have a plan for when you'll begin retirement. If you're simply winging it thinking you'll retire whenever the moment feels right, you risk not having as much as you need saved. Be as realistic as possible as you're thinking about your desired retirement age, too. If you're currently battling health issues, for instance, you may not be able to work into your 70s or beyond. By thinking about what age you can realistically retire, it will be easier to plan for your senior years.

ALSO READ: Is There Really a Right Age to Retire?

Your expenses could change once you retire, so it may not be safe to assume you'll be spending the same amount per year in retirement that you are now. To get an idea of your retirement budget, start mapping out your future expenses. You won't be able to account for everything, of course, but at least consider the major costs that could differ from your current budget. For example, if you plan to travel extensively in retirement, be sure to build that expense into your budget. Again, your retirement budget doesn't have to be 100% accurate, but by at least thinking about it now, you'll be more prepared.

The average retiree spends around $4,300 per year on out-of-pocket healthcare expenses, according to a report from the Center for Retirement Research at Boston College. Medicare won't cover all your healthcare costs in retirement, so it's important to leave room in your budget for these expenses. You may not be able to predict exactly how much you'll spend on healthcare, but at least consider costs like premiums, deductibles, copays, and coinsurance -- out-of-pocket expenses you'll still be responsible for even with Medicare coverage.

Many people choose to begin claiming Social Security benefits as soon as they retire, but you don't necessarily have to go that route. You can begin claiming at 62 years old or any age thereafter, and the age you begin claiming will affect how much you receive in benefits each month. The longer you wait to claim -- up to age 70 -- the more you'll collect. While you can wait until after age 70 to begin claiming, you won't receive any additional benefits each month by doing so. Keep in mind, too, that once you begin claiming, your benefit amount is generally locked in for life (save for annual cost-of-living adjustments). So it's important to ensure you've thought about this decision carefully, since it will affect the rest of your retirement.

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The average retiree receives $1,503 per month in benefits, according to the Social Security Administration, and your monthly checks are only designed to replace around 40% of your pre-retirement income. In other words, the bulk of your income in retirement will likely need to come from your savings, pension, or other source besides Social Security. You can check your estimated future benefit amount by creating a mySocialSecurity account online, which can help when you're determining how much you should save for retirement.

ALSO READ: Social Security: A Comprehensive Guide

Once you know what age you'd like to retire and have an idea of roughly how much money will need to come from your savings each year, you can determine how much you should aim to save by the time you retire. The easiest way to calculate this number is to throw all your information into a retirement calculator. Your results should give you an idea of how much you'll need to save by retirement age as well as how much you should be saving each month to reach that goal.

An emergency fund is vital at any stage in life, but it's arguably even more important in retirement when you're living on a fixed income. If you face an unexpected expense in retirement and you don't have an emergency fund, you'll likely need to pull more than you anticipated from your savings. That, in turn, could cause your retirement fund to run dry sooner than expected -- especially if you face repeated unplanned expenses over the years. Most experts recommend saving enough to cover three to six months' worth of living expenses, but it may be smart to save a little more than that as you're getting closer to retirement. Because you'll be living on a fixed income, it will be tougher to replenish your emergency fund once you withdraw from it. By saving more before you retire, you'll be more prepared for the unexpected.

Although some people believe you have to be completely debt-free before you retire, for many workers, that's simply unrealistic. Paying off all your debt before retirement can actually be risky in some cases, too. If you only have so much cash to spare each month and you have to choose between paying off lower-interest debt (like a mortgage) or saving for retirement, paying off debt could hurt your retirement savings. However, it is a good idea to pay off high-interest debt (such as credit card debt) before you retire. Because this type of debt can cost you hundreds or even thousands of dollars in interest over time, the longer it takes to pay it off, the less you'll have available to spend in retirement.

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Saving enough for retirement is only half of the equation; you'll also need to determine how much you can safely withdraw from your savings each year so your money lasts as long as possible. The most common benchmark is the 4% rule, which states that you can withdraw 4% of your total savings during the first year of retirement, then adjust your withdrawals each year after for inflation. The problem with the 4% rule, though, is that it assumes you'll be spending the same amount (adjusted for inflation) each year in retirement. In reality, your expenses may fluctuate from year to year throughout your senior years. Your best bet may be to talk to a financial advisor to create a withdrawal plan based on your unique situation, but the 4% rule is a good way to get a rough estimate of how much you can withdraw from your savings each year.

ALSO READ: 3 401(k) Withdrawal Rules That Will Help Your Retirement Savings Last

Long-term care is one of the heftiest expenses you may face in retirement. Around 70% of today's 65-year-olds will require long-term care at some point, according to the U.S. Department of Health and Human Services, and the average semi-private room in a nursing home costs over $6,800 per month. In addition, Medicare typically doesn't cover long-term care, so you may be on your own to foot the bill. Long-term care insurance can be a lifesaver if you do end up needing long-term care, but you'll need to sign up early -- ideally before you retire. The longer you wait to sign up, the more you'll pay in premiums. Wait too long, and you could be denied coverage altogether.

Most people don't particularly enjoy thinking about the end of their life, but keeping your will up to date is a crucial aspect of retirement planning. Even if you already have a will and have reviewed it in the last few years, it's a good idea to revisit it again before you retire. Relationships can change, and you may find that you need to make changes to your beneficiaries. It's also worthwhile to review your will every time you experience a major life change, such as buying or selling a home, getting married or divorced, or welcoming a new grandchild into the family.

Nearly 40% of those age 55 and older say they'd like to move at least once more in their lifetime, according to a survey from Freddie Mac. Retirement can be a good opportunity to move since you're no longer tied to a location for work. You may choose to live closer to family, or you might consider finally buying that condo on the beach you've always wanted. But because your living expenses could change dramatically by moving to a new city or state, it's important to think about where you plan to live long before you retire.

Asset allocation refers to how your investments are divided up within your portfolio. When you're younger, you'll likely want to invest primarily in stocks so your investments grow as much as possible. But as you get closer to retirement, you should be investing more conservatively to protect your savings from a potential market downturn. Exactly how much you should invest in stocks versus bonds depends on your age, how close you are to retirement, and your tolerance for risk. But in general, if you're getting close to retirement age, your investments should lean toward the conservative side.

ALSO READ: 3 Asset Allocation Rules for Retirement

Planning for your senior years is about more than just saving in your retirement fund. To be as prepared as possible for retirement, you'll need to consider your entire financial picture. And by ensuring you've reached each of these milestones, you'll give yourself the best chance possible of enjoying a comfortable retirement when the time comes.

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