Preparing for retirement may seem like a job for the far-off future -- like cleaning out the garage or sorting boxes in the attic. But if you care about your future (and who doesn't?), you really should pay attention to certain things sooner rather than later.
That in mind, here are five easy steps everyone should take, and certainly by the time you hit 50. If the half-century mark beckons, just add these tasks to your list of New Year's resolutions:
Check in with Social Security to get a copy of your statement.
Your Social Security personal statement contains vital information -- an estimate of how much you and your family may get one day. You can sign up to review it online. Understand that delaying your Social Security claim as long as possible can increase benefits significantly. Each year you hold off claiming past Full Retirement Age (which will gradually rise to 67) generally adds 8 percent to your annual benefit. These increases apply until you reach 70. Remember that Social Security is the only guaranteed inflation-protected retirement benefit you are likely to receive. So your decision about when to claim it can have a real impact on your financial future.
Use a retirement income calculator to see how close you are to your goals.
Free, online tools offer projections of how much money you should save up to have the lifestyle you wish for. These calculators are far from perfect, given all the differences among individuals and uncertainties about the future. But they can make you think about where you are headed and whether you need to modify your savings -- or your expectations. They can provide a wake-up call to help you plan, especially when you have many years left to work and save. Here is one such tool. And don't forget to add in your estimated Social Security income (from Step One) to get the full picture.
Check if your retirement savings are well diversified.
I realize not everyone has a nest egg, and that is a very serious concern that our policymakers need to address. Those who do have savings should manage them with care. With the stock market up by more than 25 percent this year (as of this writing), your nest egg may be more tilted to equities than you realize. Make sure that your holdings are diversified, and that you are aware of the risks. I am not suggesting how to allocate your portfolio. But it is important to monitor the balance among stocks, bonds and cash, because it may have changed more than you realize.
Max out your contribution to your retirement savings plan(s).
At age 50, you can allocate more than before, because the government allows "catch-up" contributions for various retirement savings vehicles. Currently, the annual "catch-up" amounts are $5,500 for most 401(k) and 403(b) plans, and $1,000 for Individual Retirement Accounts (traditional and Roth). Your contributions have tax advantages and are an investment in your future. Why leave money on the table?
If you do not have health insurance through your job, take advantage of new options in the Affordable Care Act.
As a first step, learn what choices are available to you and your family here (the website really is working better now). If you have a modest income, find out if you are eligible to receive a subsidy for the premium. To be covered by January 1, you must enroll by December 23.
Where do you see most RVs? Parked in their owner's driveways for 11 months a year. So instead of rushing out to buy one for $100,000, check out renting it instead. We're told a pretty nice Airstream that sleeps six will set you back $2,000 per week. In general, the rule of thumb has always been to own what appreciates and lease what depreciates. Do you really want to walk past the behemoth in the driveway five times a day knowing it devalues a little more each month with age? And don't forget about the other costs of RV ownership: insurance, maintenance, storage off-site when you tire of it as a lawn decoration.
Our favorite places to shop are thrift stores near retirement communities. Golf clubs and golf carts show up frequently in these shops at a fraction of their original cost. We also comb the classifieds of the retirement community newsletters for gently used cars; you can find some gems with low mileage.
To state the obvious, you can always rent a boat for a day of sailing or a weekend at sea. You also let your boat-owning friends know that you're "thinking" of buying one and ask if they would mind taking you out for the day? Most boat owners love to show off their toys. And you can become the guests they always invite back by going a little overboard with the food and drink you bring. Boat owners we know say the guests they like the most are the ones who stick around long enough after the sail to help clean up and secure the vessel.
Offer your guest room to out-of-town visitors and you'll feel better asking to use theirs. Use a home-swapping service when you visit new places. Trade your plumbing skills with the house-painter's. You sew and your neighbor bakes like a pro; order up a birthday cake and offer to take up a few hems. The one commodity that retirement gives everyone is time. Barter it for the lifestyle you want.
Public libraries rent out not only books and movies, but they also run lots of free programs including lectures. Parks hold concerts in the summer for free. Colleges frequently allow those 55+ to audit classes for free; you won't earn credits toward a degree, but you will learn some new things.
Follow Debra B. Whitman, Ph.D. on Twitter: www.twitter.com/DebAARP