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Counting Down to Retirement

Seven moves to make a decade before retirement.

You thought the day would never come, but here you are—just a decade away from retirement. Sure, you’ve been saving and planning all along, but there are a number of steps you can take today to help you transition easily and stress-free to the next stage of your life.

Visualize retirement. Prior to checking out from your 9 to 5, spend some time thinking about what you want to do in retirement. Of course, there are a few great dream vacations you want to take, but what will your everyday life look like? Is there a hobby you want to pursue? Will you volunteer in your community? Keep in mind that you and your spouse may have conflicting timetables or different definitions of the ideal retirement, so make some time to discuss your dreams and resolve any differences that may arise.

Take field trips. If you’re considering a major move in retirement, plan on a little travel to check out potential new homes. Remember, it’s a lot different to live in a location than it is to vacation there. So, if you’re visiting a sun and fun destination, you need to think about more than great restaurants and golf courses. Most importantly, don’t underestimate the importance of keeping your family and friends within reach.

Save more. Although you may have always been a disciplined saver, your peak earning years afford you a valuable opportunity to boost your retirement contributions significantly. Anything extra you put away in these last few years of your working life could have a positive impact on how you will live for the rest of your life.

Double-check your retirement funding calculations. The traditional rule of thumb has been that you need 70 to 80 percent of your pre-retirement income to live on during retirement. It’s possible you’ll spend just as much time retired as you did working! I recommend using 100 percent of your current expenses to figure retirement funding. That way, your nest egg can weather any major curve balls retirement throws your way.

Spend mindfully. With your income at a maximum and many of your major expenses such as college tuition and mortgages waning or gone, you may find yourself with a budget surplus. While it’s okay to splurge on occasion, just make sure those one-time special treats don’t become part of your regular routine. Keep in mind that getting too comfortable with a higher pre-retirement lifestyle could pave the road for a tough transition to retirement.

Control Risk. At your age, the negative impact of an investment mistake is magnified because you have less time to recover. That’s why diversification and careful portfolio monitoring become even more important as retirement approaches. Note, too, that a potentially problematic risk many pre-retirees share is a portfolio that is overexposed to company stock.

Talk to an advisor. There’s no substitute for personalized, independent, professional financial advice tailored to your specific situation and concerns. Not only can an advisor steer you clear of investment blunders that are difficult to recover from, but also he or she can lay the foundation for a comprehensive retirement distribution plan that identifies which sources of retirement income would be best to tap first and factors in the tax consequences of your withdrawals. That way, you’ll keep more of the money you worked so hard to save for retirement.

Paula Dorion-Gray, CFP, a Certified Financial Planner, is president of Dorion-Gray Retirement Planning, Inc., an independent, fee-based investment management firm. In 2007, Paula was named one of America’s Top 100 independent financial advisors by “Registered Rep” magazine. Paula is a registered representative with Securities America, Inc.

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