If you're gearing up to retire in 2023, you may, at this point, be counting down the days until you're able to tender your resignation and free up 40 hours or more every week. But retirement isn't the sort of thing you should jump into. Even if you decided years ago that you want to retire in 2023, it's still important to make these key moves first.
1. Figure out what Social Security will pay you
If you worked and paid into Social Security all your life, you should be entitled to a monthly benefit once you retire. But do you know how much Social Security income you're in line for? If not, there's an easy way to find out.
Simply create an account on the Social Security Administration's website and access your most recent earnings statement. It should give you a summary of your recent wages, as well as an estimate of what your monthly Social Security benefit looks like.
If you're not happy with that number, you can always look to delay your Social Security claim a few more months or years. In fact, you can boost your monthly benefit by delaying your filing until the age of 70.
That said, you may not have the option to retire and delay Social Security. One of those things might have to give. But you should see what monthly benefit you're in line for before deciding that a 2023 retirement is right for you.
2. Determine how much annual income you'll get from your savings
You may be coming into retirement with a heap of money in an IRA or 401(k) plan. But how much annual income will that leave you with? To figure that out, you'll need to establish a withdrawal rate that's comfortable for you.
In the past, financial experts commonly advised savers to stick to a 4% withdrawal rate. Due to longer life expectancies and other factors, though, many experts are now advising to stick to a 3% withdrawal rate. Either way, you'll need to figure out what's most appropriate for you and how much annual income that allows for.
3. Map out a budget that accounts for inflation
You may have created a retirement budget in the past in the course of your planning. But is that budget still accurate?
Let's not forget that inflation has driven living costs up substantially over the past year. And chances are, inflation levels will remain high in 2023 — at least during the first half of the year.
Make sure you're in line for enough income to cover your retirement expenses, based on their current cost. The last thing you want is to leave your job — and paycheck — behind, only to struggle to make ends meet.
Retiring in 2023 is a move that could end up working out really well for you. Or you may decide that it's best to postpone retirement a bit longer. Make sure to tackle these important moves before taking that leap so you don't end up regretting your decision after the fact.
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