• 12 Essential Steps Leading Up To Retirement

    12 Essential Steps to Prepare for Retirement

    At Virtual Retirement Solutions Source, we understand retirement preparation is a profoundly personal journey filled with dreams and uncertainties. Our mission is to provide tailored guidance from the early planning to life’s final chapters, ensuring you feel confident and secure at every step.

    Retirement is not just an end; it’s the beginning of a new chapter in your life that should be approached with careful preparation and thoughtful decisions.

    This guide outlines 12 essential steps to take before retirement. These steps help you create a clear plan, maximize your financial resources, and align your goals with your lifestyle needs. Whether you’re three years away or just a few months from retirement, these actions will set the stage for a fulfilling and stress-free transition.

    We think you should prepare for retirement 5-10 years before it happens. Some of these 12 steps will be within a few months, while others should be prepared for years in advance.

    When considering financial accounts after retirement, you have several options. This article is about being prepared for retirement. Still, you have choices regarding your retirement accounts, including opening a Self-Directed IRA to purchase and invest in alternative options outside the stock market. Alternative investments could include investment homes, precious metals, including IRS-approved gold and silver, and many other investment options.

    Don’t worry if you haven’t considered all these items; there are more, and you can start managing your retirement at any point, even after you have “retired.”

    1. Review Retirement Accounts

    Retirement account preparations should be completed throughout your working career. You should look at and access your investments yearly to maximize returns and contributions. When changing jobs throughout your career, you should always be looking at doing a yearly rollover to an existing IRA, or an alternative option would be a Rollover Gold IRA with the retirement funds at your old employer’s 401(k).

    You should look at your account 3-5 years before retirement. Ensure you have all retirement accounts and savings organized and accounted for.

    • Assess the balance of your 401(k), IRA, and other savings accounts to ensure they align with your retirement goals. Make changes in the final 3-5 years with your employer’s 401(k) or IRAs.
    • Adjust your investment mix to reduce risk as you approach retirement.
    • Consider consolidating accounts to simplify management and reduce fees.

    Why it matters: Regularly reviewing these accounts ensures your savings remain on track and aligned with your desired lifestyle.

    2. Pay Off or Reduce Any Outstanding Debt

    Not planning for debt is one of the significant reasons retirees must return to work. The plan is to retire and sip coffee every morning, but you forget about the car, house, medical, or credit card debts.

    If possible, you should be debt-free 3 years before retirement. This 36-month period allows you to understand and get ahold of your expenses. Removing debt also provides additional retirement savings, which could lead to higher returns and more retirement income.

    • Prioritize high-interest debts, such as credit cards or personal loans.
    • Evaluate whether paying off your mortgage before retirement is feasible.
    • Develop a repayment plan to eliminate financial stress during retirement.

    Why it matters: Entering retirement with minimal debt allows you to focus your resources on enjoying life rather than managing liabilities.

    3. Assess Your Potential Living Situation

    Are you staying in your current home, selling, and downsizing, or moving to a larger property for the grandkids? The idea here is to know your living situation to assess your monthly expenses. Living expenses include property, state, and local taxes. Don’t forget about the insurance required for the home.

    • Evaluate whether your current home will meet your future needs.
    • Consider downsizing or relocating to reduce expenses or improve quality of life.
    • Research areas with favorable tax structures and access to healthcare.

    Why it matters: Planning your living situation ensures your home supports your lifestyle and budget.

    4. Build a Pro-Forma Budget Based on Expected Living Costs

    Estimating your budget will include income (from all sources) and expenses. Expenses include those known and unknown. Build a budget, know your monthly living cost, and then determine how much retirement income you will need from all sources.

    • Estimate monthly expenses for housing, utilities, food, travel, and leisure.
    • Account for inflation and healthcare costs.
    • Create a realistic spending plan that aligns with your income sources.

    Why it matters: A detailed budget helps you manage expenses and avoid financial surprises.

    5. Review or Complete an Estate Plan

    Don’t retire without an estate plan. At a minimum, you should have a will, but a trust may also be a good choice if you have several family members named in the will or you have several investments or properties. Don’t let the family decide where you want your money to go. Get this accomplished before you retire, and review and make changes yearly as life changes.

    • Update your will, trust, and power of attorney to reflect current wishes.
    • Verify beneficiary designations on accounts and insurance policies.
    • Consider creating a digital estate plan for online assets.

    Why it matters: Estate planning protects your loved ones and ensures your legacy is distributed according to your wishes.

    6. Know Your Medical Costs

    Are you healthy? or do you have medical issues that have been ongoing for several years? You need to be concerned about your medical expenses and potential expenses. Nobody can see the future, but being prepared allows you to be medically healthy during retirement.

    • Research Medicare options and choose the right plan for your needs.
    • Estimate out-of-pocket expenses for co-pays, deductibles, and prescriptions.
    • Consider long-term care insurance to cover extended healthcare needs.

    Why it matters: Understanding medical costs helps you prepare for one of retirement’s most significant expenses.

    7. Max Contributions to HSA Accounts

    We believe you should max out your HSA accounts 3 years before your retirement. There are many reasons, but this is a pre-tax deduction, and as long as you’re using the money for medical reasons, there is NEVER a tax consequence. The great thing about HSA accounts is the opportunity to invest that money with tax-free growth. So, max out your account and invest. While working, pay medical bills you can afford with your earned income and use that as a write-off on your yearly tax returns.

    • Contribute the maximum allowed to your Health Savings Account (HSA) while working. In 2025, the HSA contribution limits increase to $4,300 for individuals and $8,550 for family contributions. The catchup for those 55 and older is an additional $1,000.
    • Use your HSA for qualified medical expenses during retirement. Tax-free and no penalty as long as it is medical-related.
    • Preserve funds for future healthcare needs by avoiding withdrawal pre-retirement.

    Why it matters: HSAs offer tax advantages that can significantly offset medical expenses in retirement.

    8. Decide When to Claim Social Security

    Social Security retirement benefits are available for distribution starting at 62 and must be taken by the age of 70. Deciding when to take your SS benefits will depend on your needed monthly income.

    >>Check out the SSA.gov Benefit Calculators<<

    • Evaluate the financial impact of claiming benefits early, at full retirement age, or delaying.
    • Use Social Security calculators to estimate your monthly income.
    • Coordinate your claiming strategy with other retirement income sources.

    Why it matters: Timing your Social Security benefits optimally can increase your lifetime income.

    9. Understand Expected Taxes in Retirement

    Are your distributions from your employer’s 401(k) or IRA taxed? Know that your Social Security income is taxed at your current tax rate at retirement. So yes, while managing your retirement, consider your monthly needs and include any taxes that may be assessed as income tax during retirement.

    • Learn how distributions from 401(k)s and IRAs are taxed.
    • Strategize withdrawals to minimize tax liability.
    • Consider converting traditional accounts to Roth IRAs for tax-free income later.

    Why it matters: Proactive tax planning helps preserve your retirement savings.

    10. Save for 12 Months of Unexpected Expenses

    While working, we often suggest individuals save for 6 months of possible loss of employment or unexpected expenses. You must save for that amount once you complete a potential budget for your first year of retirement. Yes, you will be taking retirement income, but having 12 months of expenses saved in a high-interest account at the bank or under your mattress will give you peace of mind.

    • Build a cash reserve for emergencies such as medical bills or home repairs.
    • Keep funds in a liquid account for easy access.
    • Avoid dipping into long-term investments for short-term needs.

    Why it matters: A solid emergency fund provides peace of mind and financial stability.

    11. Max Out 401(k) or IRA Contributions

    While still employed and within the last year or two, we suggest maxing out your 401(k). The assumption is that you have your debt paid off and more disposable income. By taking a max contribution to your 401(k), you can put more money away for retirement. Once you have your maximum contribution to your 401(k), make a maximum contribution to your Roth IRA. The Roth has a maximum amount allowable based on your income or household income, but max all the IRAs out for the year or two leading up to your retirement. Remember, IRA contributions must be made based on earned income, so you cannot contribute without earned income.

    • Take advantage of catch-up contributions if you’re over 50.
    • Contribute the maximum to boost your savings before retirement.
    • Ensure you’re receiving any available employer match.

    Why it matters: Maximizing contributions builds a stronger financial foundation.

    12. Manage Your Retirement Like a Business

    As said before and emphasized here, your retirement is not a set-it-and-forget-it time of your life. Before and during retirement, you should manage your retirement income, expenses, insurance, and disposable income to ensure you have everything you desire during your retirement years.

    • Track income and expenses regularly to stay on budget.
    • Set clear goals for travel, hobbies, or other retirement plans.
    • Review your financial plan annually and make adjustments as needed.
    • Stay flexible to adapt to changes in market conditions or personal circumstances.

    Why it matters: Treating retirement like a business ensures financial efficiency and long-term security.

    Final Thoughts on Preparing for Retirement

    Preparing for retirement is a journey that requires thoughtful planning and proactive steps. At VRS, we’re committed to providing all the pertinent information necessary for and during retirement. We hope you found good information and insight in this article and expect we may have provoked some thoughts that you will be following up on.

    Good luck with your retirement planning!

     

  • Starting Late on retirement Savings? You’re Not Alone

    Reaching the age of 50 with little to no retirement savings can be a worrisome realization, but it’s important to remember: you’re not alone. Many people find themselves in this exact situation due to various life circumstances, and the good news is that it’s never too late to turn things around. With the right mindset, planning, and determination, you can still build a path to a secure and fulfilling retirement.

    Hope for Late Retirement Savers

    Starting Late on Retirement Savings? You're Not Alone

    Life is full of unexpected events—career changes, health challenges, family obligations—that can make saving for retirement a challenge. According to studies, a significant percentage of Americans in their 50s have less than $50,000 saved for retirement. However, this shared experience underscores an essential truth: it’s not about how you start but how you finish.

    Why There Is Hope

    1. Catch-Up Contributions: Once you turn 50, you can contribute more to tax-advantaged accounts like 401(k)s and IRAs. These catch-up provisions allow you to save faster and reduce taxable income simultaneously.
    2. Time to Make Smart Choices: While starting later may mean fewer years to save, it also means you can focus with clarity on your goals and make informed, strategic decisions about budgeting, investing, and spending.
    3. A Chance to Redefine Retirement: Retirement doesn’t have to mean stopping work altogether. Many late savers choose to continue working part-time, pursue passion projects, or start businesses—all of which can provide additional income and purpose.
    4. Available Resources: Financial tools and professional advisors are more accessible than ever. Whether it’s online calculators, educational webinars, or one-on-one financial planning, there are plenty of resources to guide you on your journey.

    Steps to Take Now to Manage Your Retirement

    • Assess Your Situation: Take stock of your finances, including income, expenses, and any assets or retirement accounts you already have.
    • Prioritize Saving: Adjust your budget to allocate as much as possible toward retirement savings. Even small contributions can grow significantly over time.
    • Stay Positive: Avoid being overwhelmed by the numbers. Focus on what you can do today to make progress.

    You’re Not Behind—You’re Just Beginning

    It’s natural to feel concerned when starting late, but every step forward is a step toward greater security. By accepting where you are and committing to a plan, you’re proving that it’s never too late to create a brighter financial future. Remember, many others are walking the same path, and with determination, hope, and action, retirement can still be within reach.

  • Retirement Solutions for Late Savers

    Reaching 50 without substantial retirement savings can feel daunting, but it’s never too late to take meaningful steps toward financial security. By leveraging available tools, making strategic decisions, and staying committed, you can still build a solid foundation for retirement.

    Here are actionable steps for late savers to enhance their retirement preparedness:

    Maximize Contributions

    • Take Advantage of Catch-Up Contributions: For those aged 50 and older, the IRS allows increased contributions to retirement accounts. In 2024, you can contribute an additional $7,500 to 401(k) plans, on top of the standard $22,500 limit, and an extra $1,000 to IRAs.
    • Open or Maximize an HSA: A Health Savings Account (HSA) can act as both a tax-advantaged savings tool and a way to cover healthcare costs in retirement. Individuals aged 55 and older can contribute an additional $1,000 annually.

    Optimize Spending and Savings

    • Create a Detailed Budget: Identify areas where you can cut unnecessary expenses to free up more money for savings.
    • Focus on High-Interest Debt: Paying off credit cards or other high-interest debt will reduce financial stress and free up funds for investing.
    • Automate Savings: Set up automatic transfers to ensure consistent contributions to retirement accounts.

    Adjust Investment Strategies

    • Invest for Growth: While being mindful of risk tolerance, consider allocating more to growth-oriented assets like stocks to allow your money to grow faster.
    • Diversify Your Portfolio: Spreading investments across various asset classes can help balance risk and reward.

    Delay Retirement Benefits

    • Work Longer, If Possible: Extending your working years allows more time to save and reduces the years you’ll need to draw on savings.
    • Delay Social Security: Waiting to claim Social Security benefits until full retirement age, or even age 70, increases your monthly benefit significantly.

    Seek Professional Advice

    • Consult a Financial Advisor: A professional can help you create a personalized plan, optimize your investments, and ensure you’re on track for retirement.
    • Use Online Tools: Retirement calculators can provide insights into how much you need to save and how various strategies affect your goals.

    Explore Additional Income Streams

    • Consider a Side Hustle: Part-time work or freelance opportunities can provide extra income for savings.
    • Downsize or Relocate: Moving to a smaller home or a lower-cost area can free up significant resources for retirement.

    By acting decisively and consistently, even those who start late can make substantial progress toward a comfortable retirement. The key is to remain focused, take full advantage of available resources, and adjust plans as needed.