If you’ve considered retiring in 2022, you’re certainly not alone. More and more people are choosing to step away from work while they’re active and healthy. If you’re considering retirement in 2022, there’s plenty you can do today to prepare. Here are eight ways to get ready for life after work.
1. Start a Checklist
I’m a huge fan of checklists. If you’ve never read The Checklist Manifesto, I recommend it. While I always joke about being a recovering engineer, maintaining checklists for all my business processes and personal projects help me keep things organized and consistent. Your checklist doesn’t have to be a massive spreadsheet, Gantt chart, or project you track in Asana. A written list on a piece of paper will do.
In fact, I’ve made it even easier by creating one for you! Visit my resources page and download it for free today.
2. Max Out Your Retirement Savings
As you make your final approach, it’s time to increase your contributions to your retirement plans, if you can, especially if you’re reading this before 2021 ends. You can contribute up to $19,500 into your 401(k) in 2021 – that increases to $20,500 in 2022. If you’re over age 50, tack on another $6,500 to that number.
If you’re planning to retire mid-year in 2022, don’t forget to adjust your retirement savings accordingly. At the very least, make sure you save enough to get every bit of employer match that’s available.
3. Replenish Your Emergency Fund
Cash isn’t sexy, but it sure does come in handy in an emergency. Since you’ll be living off your investments, in part or in whole, it’s important to have some cash reserves set aside to allow your investments to recover from any market pullbacks you’ll see in the future.
A rule of thumb for retirees is to have 6 to 12 months’ worth of living expenses set aside in cash. If you don’t have a good estimate of your retirement living expenses, my “On Track for Retirement” course outlines a quick and easy way to estimate them.
4. Plan to Consolidate Your Accounts
As you begin your retirement journey, managing your investments becomes much simpler when you consolidate your accounts. If you have old employer retirement accounts, you may have better and cheaper investment options when you roll them into an IRA. In addition, making strategic and tactical investment decisions becomes easier when like-typed accounts are consolidated into one.
However, be careful! Consolidating accounts isn’t right for everyone. For instance, if you’re retiring before age 59-1/2, you may want to access your current employer plans using the Rule of 55. Also, there are no 10% early withdrawal penalties for 457 plans. Each case is different, so get help if you need it.
5. Review Your Investment Allocation
One of the most difficult aspects of retirement is turning your investments into a monthly paycheck. That also means that you’ll be shifting your investment strategy from “growth” to “growth & income” if you’re retiring in 2022. Check the amount of risk in your portfolio to ensure that it can continue to keep paying you, even if the market goes down.
With markets consistently testing all-time highs, there’s always a chance we could see a correction at some point in the near future. Would you be able to continue taking withdrawals if the market dropped by 20%? How about 30%? If you’re not confident managing your own investments, a fee-only financial advisor like Prana Wealth may be able to help you.
6. Make an Appointment to Update Your Estate Plan
If you haven’t updated your estate planning documents within the last ten years, make an appointment with your attorney to have them refreshed. Most people will need a will, an advanced directive for healthcare, and a financial power of attorney. If you have a blended family or unique family dynamics, you may need a trust or other documents. No matter your situation, if you plan on retiring in 2022, now is a good time to update your estate plan.
If you don’t have an estate planning attorney, you can find a competent one online using the ACTEC find an attorney tool.
7. Update Your Beneficiary Designations
After you’ve updated your estate plan, it’s time to review the beneficiary designations of your retirement accounts, pensions, annuities, and life insurance policies. These designations should follow the recommendations of your updated estate plan, if necessary.
If you’ve gone through a divorce at some point, this can be important. It’s not uncommon for an ex to inherit money because these details have been neglected.
8. Start Preparing to Leave Work for the Last Time
Finally, it’s time to prepare for your last day of work. Specifically, you may want to update your personal contacts if there’s anyone you want to stay in touch with after you leave. However, be careful with this – you certainly don’t want to run afoul of any non-compete or non-solicit clauses of your employment agreement.
You may also want to review your online accounts. Have you used your work email to create any logins for websites that you will need to access after retirement? If so, it’s time to start making those changes.
Finally, don’t forget to move all your personal items back home. However, you may want to wait until it’s close to your last day of work – unless you really just don’t care if anyone knows you’re retiring.
Retiring in 2022
If you’re retiring in 2022, you’re not alone. After 2020, more and more people are deciding to leave the workforce and enjoy life while they’re active and healthy. Even those who enjoy their job are realizing that life is short, and in some cases, they don’t need more to be happy. After all, the only person in this world that’s responsible for making you happy – is you.
If you need help retiring in 2022, then click here to set up a quick, complimentary introduction call to see if Prana Wealth is a good fit. We do still have the capacity to take on new clients.
As a fee-only financial advisor in Atlanta, we can (and do) work virtually with clients all across the U.S. and we’re here to help you when you’re ready.