Oversee estate planning. Everyone needs an updated will, power of attorney and advanced medical directive. Saunders says the biggest mistakes he sees are with accounts that circumvent the will, such as joint accounts that transfer on death, IRAs, pension plans, life insurance proceeds and annuities. The executor of the estate may be left with no funds to carry out the decedent's wishes. Yet many accounts are best distributed directly to people as beneficiaries rather than through the estate. For instance, if IRAs and certain retirement accounts list the estate as the beneficiary rather than a person, the ultimate beneficiary loses the advantage of being able to stretch the payouts over long periods of time.
"I recommend that people review their wills and accounts at least every five years," says Saunders. "They should know who the beneficiaries are on the will and other accounts. A letter of instruction to the executor detailing who should receive which personal heirloom is not binding, but a great assistance to a family in mourning, which usually includes the executor." Providing an inventory of personal data such as Social Security number, date of birth, bank account numbers, lawyers, insurance policy numbers, the location of a copy of the will and prepaid burial arrangements will allow loved ones to grieve without additional stress.
Ditch college expenses. The time to fund your children's college educations is when they're small -- not when they're matriculating and you're counting down to retirement. "Nobody should ever divert retirement contributions toward college funding for their children," says Certified Financial Planner Joe Baker, president of ALCUS Financial Group, based in Mount Pleasant, S.C. "There are so many more options available to fund college for your kids than there are to fund your retirement," he says. Your children can take advantage of student loans, grants, scholarships, student work programs and they can pay their own way by working while going to college as students did in the good old days. "If your child went to a school that cost $450,000 a year, that $200,000 college funding goal would pale in comparison to the amount that you would need to save to fund a 20 or 30-year retirement goal," says Baker. Max out a Roth IRA each year instead.
Look at the big picture with a planner. Before planning a date to retire, see a financial expert and get a broad comprehensive perspective on your whole financial situation and determine if everything is in order and you are really ready. "This can range from re-evaluating your portfolio -- are your investments structured in a way that's appropriate for someone transitioning into retirement -- to insurance issues," says Kitces. There are a lot of questions to ask that require answers: Are you still paying for disability insurance you won't need any longer? How will your health insurance be handled during the bridge years between when you retire and when you are eligible for Medicare?
Prepare a budget. Prepare a paper budget or spending plan to give yourself an idea of what your actual living expenses will be once you are not working. "There are some expenses that go away once you are not working," says FitzSimmons. Food costs may go down if you used to eat lunch in a café or restaurant daily, commuting expenses will decrease, and if you were required to wear business attire, these expenses will be eliminated as well.
"What a lot of people overlook is the possibility for extensive travel, and this can be very important in the equation for some people," says FitzSimmons. Think about where, and how often, you will want to travel. If you live in a cold climate, you may want to spend a few winter months in Arizona or Florida. Your current financial situation may not provide for travel or winters in warm climates. "There may be a need for additional 'fun money' that comes from working part-time," says FitzSimmons.