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Before you start checking off items from your retirement bucket list…

If you’re getting close to retirement, there are a few things you should be focusing on. Your retirement bucket list is one, besides the size of your retirement fund. Financial experts agree that there are a few smart financial moves that you can make before you retire that can, well, save your savings. Additionally, these steps will be able to help you provide for your loved ones and reduce your taxes.

As you probably already know, every financial decision you make now impacts your financial future and retirement bucket list. It is these decisions that can determine whether you retire with no financial regrets.

It’s no secret that you have many retirement options, and these options may seem overwhelming. These options can also make it more difficult to make smart financial decisions in your pre-retirement years.

The list below should be looked at as financial guidelines; like all financial decisions, these are not for everyone and you should consider your individual financial situation before determining which will work best for you.

Retirement Bucket List Spending While You Can.

See what we mean when we say this advice won’t be for everyone? Telling people to spend money before they retire can be a slippery slope – if the spending isn’t right.

To spend less is the typical advice that financial adviser suggest to retirees. The focus of retirement is rarely on acquiring and increasing their retirement income. This makes sense when you consider health costs and market performance.

This is why those preparing for retirement should spend before they retire. But not on just anything.

Home repairs, car repairs, surgeries and other necessary expenses should be taken care of prior to retirement. Anything that can be pre-emptively accounted for should be purchased or paid for before you retire.

This is because in the years before your retirement you still have income coming in. Many retirees only spend a small bit of their retirement savings and wait for their withdrawals or Social Security. The wisdom behind this is that their portfolios may grow more while they are waiting.

While this could happen and, in theory, is a good idea, retirees often aren’t paying enough attention to the market. This means that, in the event the market takes a turn, you may be taking out a larger portion of your portfolio.

Keeping some of your reserves liquid means you don’t have to sell shares in a low performing market and so that you can remain financially flexible. The reason you should spend now also helps if the market takes a turn, because you won’t be hit with as many unexpected expense as you would otherwise.

Know What Decisions Cannot Change

Financial decisions are important; however, some of your financial decisions can change and some cannot.

For example, you cannot undo your Social Security withdrawals. If you begin to rely on those too soon, you may get used to an income that could run out and that you won’t get back.

Additionally, certain retirement withdrawal decisions cannot be reversed. For example, if you choose to receive your funds in one lump sum, you cannot go back and choose to get them in monthly payments. As with every financial options, each choice can be considered the appropriate choice depending on your financial situation. If you think you will live beyond your finances, a monthly payment makes sense. If the majority of your retirement assets are in a different place, then the lump sum may make sense to you.

What to do with that money once you get it is also a decision that has no turning back. In some cases you may not be able to manage the funds yourself, so moving them into an IRA account might not be right.

Other decisions, such as where to live, may not be reversible. If you choose to live in a retirement home, you may be making a financial decision that you cannot change. In many cases, you’ll have to put down a down payment or an entry fee to live in a retirement community – and that may not leave enough money to provide for your heirs.  It’s important to weigh your options before making a decision that cannot be different later on.

Learn What Your Benefits Really Offer

Your employer may offer you a retirement plan, but do you know exactly what that plan means for your future?

It is important to examine the fine print of your 401(k) plan or your other benefit plans. This includes the fine print of your annuity choices.

You should also be considering your options when it comes to pension plans and annuities. Depending on the plan, they may offer a choice between multiyear withdrawals or a steady income stream. In the latter, you will be able to receive the maximum monthly payment for the rest of your life. This may seem like an excellent choice because you will not outlive your income; however, should you pass away, your family will not receive any funds.

If you chose a multi-year term withdrawal plan, you can receive your annuity payouts monthly for the term you choose. In this scenario, if you pass away, your family only receives payouts until the end of the term you choose.

Learning the fine print of these benefits can help you make the best decision for you and your family.

Diversify Your Portfolio

If you have a traditional non-Roth IRA account, a 401(k) account or other traditional retirement accounts, you will have to pay taxes in some way. It is best to know what you’ll be saddled with before you begin taking out your required minimum distributions.

Typically, these required minimum distributions are taxed in the same way as your income. So, knowing your pre-and-post-retirement tax bracket, can help you set aside funds to pay for taxes and feel less of a financial burden.

Additionally, once you are required to take out your minimum distributions. You may lose benefits that allow you to lower the portion of your income that is taxable. Such as, the ability to make pretax contributions to your retirement account.  

If you own a home, you risk the possibility of losing your mortgage-interest tax deduction.

Just because you lose the ability to limit your taxable income, doesn’t mean you lose control over your income completely. You can always move your funds into brokerage accounts or convert your Roth account to ensure that your withdrawals aren’t taxed at ordinary income rates.

Know Your Options

The most important thing to know before you retire is that you have many options at your disposal. Taking measures to educate yourself on the options listed above and your other retirement options can make your transition into retirement easier – and can ensure that you don’t lose your retirement income.