7 Financial Milestones for Retirement

Author: Maurie Backman | September 20, 2020

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Plan, plan, and plan some more

Retirement is an exciting period of life, but it can also be a daunting one given the financial uncertainties involved. Your best bet, therefore, is to go in prepared for what lies ahead, and you can do so by making sure to reach these milestones before bringing your time in the workforce to an end.

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1. Have a detailed budget

Just as it's important to know what your spending entails during your working years, so too should you know what your lifestyle will cost you in retirement. Spend some time thinking about where you'll live as a senior, what you'll do with your days, and what expenses you'll look to maintain versus unload. That will give you a good sense of where you stand financially before leaving your career behind.

ALSO READ: 11 Best Discounts for Seniors

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2. Know where your income will come from

Maybe you'll get a bunch of your retirement income from a dedicated savings plan, like an IRA or 401(k). Or maybe you're entitled to a generous pension that will cover the bulk of your bills. Chances are, you'll have more than one income source to tap as a senior, so figure out where your money will come from.

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3. Identify your full retirement age for Social Security purposes

If you worked and paid into Social Security during your career, you should be entitled to benefits once you retire. But the age at which you claim those benefits will dictate how much money they're worth each month. You're entitled to your full monthly benefit based on your personal earnings history once you reach full retirement age, which is either 66, 67, or 66 and a specific number of months, depending on your year of birth. Though you can sign up for benefits before or after full retirement age, it's important to know what that age is.

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4. Have 10 times your ending salary saved

There's no single amount of retirement savings that guarantees you'll be financially secure for the rest of your life. Some seniors might get by just fine with $200,000 to their name, while others might struggle with a $1 million nest egg. But as a general rule, it's a good idea to have 10 times your ending salary socked away for your golden years, so if you're nowhere close, you may want to consider delaying retirement a bit and seeing if you can boost your savings first.

ALSO READ: Could This Be the Key to Increasing Retirement Savings?

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Senior man and woman smiling and holding each other in front of a house

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5. Have a paid-off home

Entering retirement mortgage free is by no means a requirement. But having a paid-off home will leave you with one less large expense to worry about, and when you're on a fixed income, that's a very good thing. If you're nearing retirement and still have a few years left on your mortgage, it wouldn't hurt to accelerate your repayment schedule. As a bonus, you'll save money on interest in the process.

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6. Understand what your costs and coverage will be under Medicare

Many seniors get health coverage through Medicare but are shocked to learn that it's far from free. While there's generally no premium to pay for Medicare Part A, which covers hospital care, Parts B and D, which cover outpatient services and prescriptions, respectively, do come with a monthly premium. There are also copays and coinsurance to deal with when you're on Medicare, coupled with the supplemental insurance you might need. Be sure to read up on your Medicare benefits and costs before you retire so you're not caught off guard later on.

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7. Have a plan for long-term care

An estimated 70% of seniors aged 65 and over will need some type of long-term care in their lifetime, and the costs could be astronomical. That's why it's so important to have a plan for how you'll receive the care you might need down the line. Maybe you have a family member close by who can be a caregiver. Or maybe you don't, in which case it could definitely pay to purchase a long-term care insurance policy. The key, either way, is to address the issue of long-term care well before you're actually in that situation.

ALSO READ: 3 Ways to Help Your Retirement Savings Last Longer

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Senior couple on a yacht

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Your efforts to plan will really pay off

The more you do to prepare for retirement, the greater your chances of getting to enjoy your senior years to the fullest. Aim to check these goals off your list before closing out your career -- you'll be thankful you did in the long run.

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