4 Money Moves to Make Before You Retire

Ah, retirement. Perhaps you’re daydreaming about that glorious day in the distant future when you’ll no longer be subject to long conference calls, bad fluorescent office lighting, and an endless barrage of emails. Not so fast. Before you book a party space for your retirement soiree and plan out that luxe cruise around-the-world, you need to make sure you’re financially prepared for your golden years.

There are a number of decisions you’ll need to make and questions you should ask yourself. For example, is debt consolidation a good idea? Is it actually important to follow a budget now when your retirement seems so far away? These 4 money moves to make before you retire can help ensure that you’re ready for your new life of geriatric leisure. Keep reading to find out more.

Money moves to make for retirement

1. Pay off existing debt

Existing debt and its evil accrued interest will make it difficult for you to save money for retirement. By making a plan to pay off your debt now, you’ll be able to put your extra money towards a retirement fund instead of owing it to your lender. Debt consolidation can help you pay off debt. With debt consolidation, you’ll combine several unsecured debts into one monthly payment. Doing so can help you save in interest and simplify bill paying.

2. Tweak your budget

Once you retire, you’ll be on a fixed income for 30 years or more (depending, of course, on when you retire and how long you live). Tweaking your budget now to set aside some extra cash for your retirement fund will give you more to spend later, especially if you put it in a high-yield savings account and allow it to accrue interest. So decide: would you rather have 6 different streaming services today, or a whole lotta dough in the future?

3. Rebalance your portfolio

You’ll probably want to rethink your portfolio’s asset allocation. As people age, they typically become more conservative in their investing. Younger investors often take on more risk, e.g. stocks and equity funds, while older investors favor safer investments that don’t expose them to as much market risk, such as bonds. You should consider an allocation mix that both grows your money to help you keep up with inflation but doesn’t taking on unnecessary risk.

Consider using the rule of 110. This states that the percentage of your portfolio devoted to stocks should be 110 minus your age. So, if you’re 35 years old, the rule dictates that you should have 75% (110-35) of your funds in stocks and 25% in bonds.

4. Focus on your 401(k)

If you haven’t given your 401(k) much thought before, now is the time to get serious about it. Try to contribute at least enough to earn your employer’s matching contribution. This is when your employer contributes a certain amount to your retirement savings that is equal to the amount that you contribute. If you don’t put in enough to earn your employer’s matching number, you’re basically leaving free money on the table.

By Stefanie Gordon

Stefanie Gordon is a content strategist with over a decade of professional writing experience. She is a former financial journalist who has spent the last several years working in digital marketing. She specializes in content strategy and creation for large and small businesses in finance and technology.