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If 2016 brings you a little closer to sticking your toe in the retirement waters, we have some suggested resolutions for you that may even beat starting this year's resolution list with that perennial favorite: Go on a diet.
1. Actually, you should probably start with the diet anyway.
The best currency you can bring with you into retirement is your good health and since the odds are that you are part of the 68.8 percent of the population who are overweight or obese, why not shed a couple of pounds and get yourself in shape. As your body mass index rises, so does your chance of heart disease.
Medical care is already pricey enough without you needing lots more of it. Fidelity Investments, which tracks retirement costs, says that a 65-year-old couple retiring now should expect to spend about $240,000 for medical care in the future. That doesn't include long-term care, which is a whole other (seriously expensive) ballgame. That $240,000 is just how much it will cost for deductibles, copayments, premiums for additional coverages and things that Medicare doesn't cover -- like glasses and hearing aids.
Being healthy is going to make your retirement a whole lot better. You want to be able to travel, not run to doctors or be a person who starts their day at the medicine cabinet. So get busy now with that diet and exercise program.
2. Make a what-I-will-do-in-retirement list.
It's been said that the money is no better in retirement, but the hours are. Actually, the hours are only better if you have a plan for how to spend them. Loneliness and boredom are real balloon-poppers when it comes to having a happy retirement. Staying active and engaged with other people is of paramount importance.
Even Del Webb, the developer of America’s most famous retirement community — Sun City, near Phoenix, Ariz. — couldn’t live the life of leisure. A 1962 Time magazine cover story about him said: “Del Webb, the hulking, slope-shouldered, long-striding 63-year-old who hates to be called Delbert, could not stand the life in one of his own Sun Cities for more than a few days — or a few hours.” He just preferred working -- an option you might not have. Chris Farrell, writing for Next Avenue, put it this way: "You spend many years holding down a full-time job (or multiple part-time jobs), so freedom from bosses and job stress is liberating at first. Many people have a bucket list of delayed projects and postponed travel, too. But … your career and the expertise you’ve built up over a lifetime are also a big part of who you are."
Make a plan, peeps, make a plan.
3. Save more, but also save smarter.
Who isn't tired of being told we don't have enough saved for retirement? It feels like that's a given. So the question becomes: What can we do about it? Save smarter, that's what.
Fully fund your 401k to get the company's full max. To do anything less is walking away from free money on the table. Those over the age of 50 can contribute up to $24,000 to their fund; if you do that and are in a 20 percent federal tax bracket, you will save $4,800 in income taxes this year, says MarketWatch.
And if you can afford it, consider buying income property while you still have a paycheck and can qualify for a mortgage. Would a duplex work for you down the road where you live in one unit and rent out the other for income? Is there a way to remodel your house to create a rental unit? Bolstering your future income passively is the best route.
4. Figure out your retirement housing now.
A lot of people have little saved but own homes with equity in them. These folks joke about how they sleep in their retirement nest egg. Sadly, the joke could become less funny pretty quickly if they don't do something about it. If this is truly the money you plan to live on once you retire, you need to have access to it. As long as it sits as untapped equity, it isn't going to do you a bit of good. What will you use to pay your bills with once you leave the workforce. People who plan to live off the equity in their homes need to liquidate it. The options include: sell and downsize to a cheaper place; rent out unused bedrooms for income; refinance to a lower interest rate and take some cash out at the same time; get a home equity loan; or consider getting a reverse mortgage.
Just a word on that last: Reverse mortgages are a mixed bag and far from a panacea. They are basically FHA-insured loans for those age 62 or older that allow allow homeowners to convert their home equity into cash with no monthly mortgage payments. Sounds great, but it's only as good for as long as you are healthy enough to live in the house. If you need to move into an assisted living facility or nursing home, the mortgage becomes due.
5. Know where your money is and what it's doing for you.
Sure it's easy to just kind of leave your investments alone. We even know someone who routinely tosses their quarterly statements away unopened because she says she can't understand them anyway.
Advisors say that a once-a-year evaluation of where your money is and how great a risk you can tolerate is a must. Think of it as your annual physical, but for your money.
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