Ready to retire in 5 years? Here's your checklist
Other investing decisions, like a transition into retirement, require a more hands-on approach.
Christine Benz, Morningstar's director of personal finance and retirement planning, recommends taking a preemptive approach as you get closer to retirement. The key is to visualize what you want your retirement to look like while you have enough time to make any adjustments you might need to get you there.
Here are five steps to take now if you plan to retire in the next five years:
1. Consider the role of work in retirement
Decide whether some kind of work is realistically part of your retirement plan. That income stream can make your retirement spending simpler, but it shouldn't be the linchpin of your whole plan. That's because you may not be able to work even if you want to.
2. Track your expenses
Understand what you're actually spending today and see whether your spending will change over the next few years and into retirement. Getting a grasp of your future spending needs will help you determine whether your plan is on track.
3. Check up on Social Security
For most people, Social Security is a key source of income in retirement. Create an account on the Social Security website and make sure they have your correct information. This will let you model out different Social Security claiming dates using your own information.
4. Assess your current retirement savings
Look at your spending and subtract Social Security to get a sense of what you'll need from your portfolio. If your spending doesn't align with roughly 4% or less of your portfolio, you may need to make some changes. Consider saving more, investing differently, putting off your planned retirement date, or adjusting how much you plan to spend in retirement.
5. Derisk your portfolio
As you get within 10 years of retirement, you'll want to make sure that your asset allocation can help protect your retirement plan from getting derailed by market volatility. If equity losses happen early on in your retirement, you can spend from your safer assets and wait until the market recovers to pull from your stock portfolio.
By thinking about retirement preemptively, you'll have a better sense of when you want to retire and what you want it to be like. Plus, you can make any course corrections needed to make it happen.
___
This article was provided to The Associated Press by Morningstar. For more personal finance content, go to https://www.morningstar.com/personal-finance
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
23 minutes ago
- The Independent
More than 600,000 Frigidaire mini fridges recalled after fire hazard causes injuries and $700K in property damages
More than 600,000 Frigidaire mini fridges have been recalled due to a fire hazard that has caused injuries and resulted in over $700,000 in property damage. The mini fridges were recalled Thursday. The fridge's internal electrical components can short circuit, the Consumer Product Safety Commission says, causing the surrounding plastic housing to catch fire. The commission said in a recent notice there have been at least 26 reports of the mini fridges 'smoking, sparking, burning, melting, overheating and catching fire.' Two people reported smoke inhalation and property damages totaled more than $700,000. The recalled fridges were sold at stores such as Walmart and online from Walmart's website and Amazon from January 2020 to December 2023. The following model numbers are included in the recall: EFMIS129, EFMIS137, EFMIS149 and EFMIS175. The recall notice said consumers should immediately stop using the recalled mini fridges and dispose of them 'in accordance with local and state regulations.' Affected consumers can receive a refund for the recalled mini fridges which sold for between $36 and $40. The Independent has reached out to Curtis International Ltd., the importer of the recalled mini fridges, for comment. The mini fridges were part of a flurry of recalls the commission issued on Thursday. HydroTech 5/8-inch Expandable Burst-Proof Hoses were recalled after at least 29 injuries from the hose bursting were reported. Pura 4 Smart Home Fragrance Diffusers with detachable covers were also recalled due to an ingestion hazard for kids, and a rechargeable electric bug zapper racket was recalled due to a shock hazard. There were also recalls issued for electric scooters and bikes. One of these notices, for FENGQS F7 Pro E-bikes, warned the product's lithium-ion battery can overheat and catch fire, posing a risk of serious injury or death.
Reuters
24 minutes ago
- Reuters
Paramount Global says Skydance merger should close in two weeks
July 25 (Reuters) - Paramount Global (PARA.O), opens new tab said on Friday it expects to complete its merger with Skydance Media by August 7, following government approval for the $8.4 billion deal. Skydance CEO David Ellison is prepared to assume the helm at Paramount, home to the venerable Paramount Pictures, the CBS broadcast network, and a collection of cable television channels. The new chief executive already is confronted with questions from investors about the future of the Paramount+ streaming service, plans for Paramount's declining television assets, and forecasts for spending on content -- including professional sports. "Now that the long, drawn-out sale process is finally nearing its end, Skydance leadership is poised to take control," wrote MoffettNathanson media analyst Robert Fishman. "With that, the real work begins -- rebuilding Paramount, addressing the critical strategic questions ahead, and charting a path toward a more sustainable and competitive future." Announced more than a year ago, the merger will unite Paramount's prized film and TV library including classics such as "Ferris Bueller's Day Off" and "Breakfast at Tiffany's," with films it produced with Skydance, including "Top Gun: Maverick" and "Mission: Impossible – Dead Reckoning." Ellison was not available for comment. He has previously said he plans to expand Paramount's technological capabilities, rebuild the Paramount+ platform and grow the streaming business, and reorganize the business to prioritize cash flow. A year ago, he said the team had identified $2 billion in cost savings. The Federal Communications Commission cleared the deal on Thursday, just weeks after Paramount settled a lawsuit filed by U.S. President Donald Trump over CBS' editing of a "60 Minutes" interview with his Democratic opponent, former Vice President Kamala Harris. The $16-million settlement drew criticism that Paramount had effectively bought regulatory approval, with the Democratic dissenter in the FCC's 2-1 vote calling it a "cowardly capitulation" to the Trump administration. The agency has repeatedly said its review was independent of the lawsuit.
Reuters
24 minutes ago
- Reuters
US appeals court strikes down SEC rule on 'audit trail' funding
WASHINGTON, July 25 (Reuters) - A federal appeals court on Friday struck down 2023 regulations adopted by the U.S. Securities and Exchange Commission on funding a comprehensive market surveillance system, finding that Wall Street's top regulator had not provided a sufficient basis for allowing stock exchanges to pass on its costs to their members, court papers showed. The unanimous decision represented another blow to SEC regulations adopted under the previous Biden administration, which faced concerted opposition from industry and Republican lawmakers. It was also a setback for the Consolidated Audit Trail, a repository of investor and transaction data meant to give regulators overarching visibility into U.S. market operations, but which has faced delays and obstacles for more than a decade. The American Securities Association and Citadel Securities, which brought the lawsuit, both hailed the outcome. The ruling "prevents a tax hike on every American investor who buys or sells a share of stock," ASA President Chris Iacovella said in a statement. The SEC did not immediately respond to requests for comment. Over the objections of its Republican members, the SEC in 2023 split the operating costs among buyers, sellers, and exchanges. Officials said at the time this would divide costs evenly but also allow exchanges several years to recoup hundreds of millions already spent. This drew stiff objections from the investment industry, which said it could be left paying an unfairly large share. The two Republicans are now part of the five-member commission's controlling majority. In an opinion for a three-judge panel of the U.S. Court of Appeals for 11th Circuit, Circuit Judge Andrew Brasher said that, because the SEC had not advanced a sufficient justification in deciding how the system's cost would fall on different actors in the marketplace, "we conclude that the 2023 Funding Order is arbitrary and capricious" and therefore in violation of federal laws governing the crafting of regulations. The appeals court sent the rule back to the SEC for further processing in line with the court's decision. The SEC mandated the CAT's creation in 2012 as a response to the "flash crash" of 2010 when major Wall Street indexes temporarily erased nearly $1 trillion in market value in a matter of minutes. Officials say it can allow regulators to spot market manipulation and have cited its data in enforcement actions.
