You're Almost There!


You're getting close—maybe just a few more years before you retire.

Now is a good time for you to evaluate your retirement options. Can you retire as planned? And equally important, do you still want to?

As you fine-tune your retirement plans, keep in mind that being near retirement also means that you have less time to recover from market volatility or a financial crisis. So, you'll want to make sure that your savings are properly diversified and that you are properly insured.

Are You Financially Ready?

The closer you are to your target retirement date, the better you can project both your estimated income and your anticipated expenses during retirement.

Only you know what you'll be spending money on during your retirement. But numerous studies have revealed some common patterns that might be useful for your planning. For example, recreation and travel expenses are usually higher during your first few years of retirement than in your later years. However, medical expenses can be very large in your later years. In fact, underestimating your expenses in your later years is a common mistake.

Use our monthly cash flow worksheet to estimate your expenses (your financial professional can also help). When doing your projections, be sure to factor in the financial challenges you may face in retirement, such as longevity, inflation, and healthcare costs. Keep in mind:

And, if you think you'll be providing financial assistance to your adult children and/or grandchildren and siblings, you'll need to account for that, too.

Ups and Downs of Retirement Expenses
ExpenseEarly in RetirementLater in RetirementComments
Basic cost of livingInflation will likely cause basic living expenses to continually increase.
Business related expenses-These expenses are largely eliminated.
Clothing & cleaning costs-Business & formal clothing, dry cleaning costs reduced.
Contributions to IRAs, savings plans, etc.-You will probably not be making salary-deferred contributions to savings plans, but may add to IRAs and personal savings.
Health insuranceHealth insurance costs rise (significantly if coverage isn't provided through an employer) until Medicare eligibility. You will still need insurance with Medicare, but it will probably be less costly.
Health care & medicationsExpect increasing dependence on health care facilities and prescription medication.
Mortgage-Mortgages likely to be paid off early in retirement.
RecreationRecreation expenses increase at first, but decrease later in retirement.
RecreationRecreation expenses increase at first, but decrease later in retirement.
Taxes - income-Generally (but not always) taxable income decreases.However, you will have to pay taxes your pension, Social Security benefits, IRA, and tax-deferred savings plan distributions.
Taxes — real estate, salesReal estate and sales taxes will probably keep going up unless you move to a less expensive area.
Transportation, parking, commutationThe need to use automobiles extensively is reduced.
TravelTravel increases at first, decreases later.

1 Paul Fronstin et al., Funding Savings Needed for Health Expenses for Persons Eligible for Medicare. Issue Brief no. 351. Employee Benefit Research Institute. December 2010.

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