10 ways to make the years before retirement count

November 16, 2016 6:32 PM

Preparing for retirement really begins on the first day a person becomes old enough to work. Whether it is investing in a 401(k), HSA or other form of retirement planning there is never enough preparation for the inevitable day when we all can no longer work anymore and covering expenses will need to come from what has been saved over the course of our lives.

To assist with this must needed preparation, SUM180, an online financial planning service, has put together 10 ways to make the final 10 to 20 years before retirement really count.

A young businessman explaining information to an elderly manhttp://195.154.178.81/DATA/i_collage/pi/shoots/783531.jpg

PeopleImages.com/Getty Images

Overview

Prepping for retirement begins on the first day a person is old enough to work. Whether it is investing in a 401(k), HSA or another form of retirement planning vehicle, there is never enough preparation for the inevitable day when one can no longer work and covering expenses will need to come from what has been saved over the course of ones lives.

To assist with this must needed preparation, SUM180, an online financial planning service, has put together 10 ways to make the final 10-to-20 years before retirement really count.

Senior man standing with arms outstretched

Tom Merton/Getty Images

Define what retirement means to you

Forget the cliches that depict retirees globetrotting via private jet or kicking back in Adirondack chairs; the truth is, for many of us, life after retirement will look a lot like life before retirement. Your retirement will depend on who you are, what you value and what you have to work with. With ten years or more to prepare, start by asking yourself what you want your life to be like after you stop working full time. Do you want to be living closer to the grandkids? Volunteering at the women's health center once a week? As your unique goals come into focus, they will also become more achievable.

Cropped view of a senior woman receiving help with her finances from her granddaughterhttp://195.154.178.81/DATA/istock_collage/0/shoots/783362.jpg

PeopleImages.com/Getty Images

Have a comprehensive, up-to-date financial plan

Once you have clear goals, your financial plan will tell you exactly how much you still need to put away. If you’re curious what that amount might be, here’s a quick way to get an idea. Consider that your retirement portfolio (not just your stock portfolio but assets that include real estate and rental income as well) should be 10-15 times your expenses in retirement. Compare that ideal retirement portfolio number to what you currently have saved and you’ll get a general idea of how much you’ll need to raise your retirement savings.

Businessman using laptop while traveling

Martin Barraud/Getty Images

Make saving for retirement your #1 financial priority -- then really lean into your savings goals

It’s never too late to save and chances are you are now at the peak of your earning power. Plus, with the kids finished with college and out of the house, you have more funds to direct into your retirement savings. This is the perfect time to fatten your nest egg and set yourself up for long-term financial security, so make it your top priority. Max out all retirement vehicles available to you and take advantage of “catch up” contributions available through your employer and for your IRA.

An elderly woman sitting in front of her laptop looking stressed and worriedhttp://195.154.178.81/DATA/shoots/ic_783362.jpg

PeopleImages.com/Getty Images

Pay off any lingering debts

If you have outstanding balances on credit cards, car loans or other installment loans, plan on paying them off before you retire. If possible, you should arrive at retirement debt-free. That way, the retirement savings you’ve worked so hard to accumulate will be yours to spend in full, rather than being reduced every month by debt payments.

A senior couple lifting cardboard boxes into or out of the back of a car parked in the driveway of a house. They are moving, perhaps downsizing. The focus is on the man who is smiling and looking toward the camera.

kali9/Getty Images

Downsize your home and car

Downsizing to a smaller, less expensive home can bring you significant savings when it comes to your mortgage, property taxes, insurance, utilities, maintenance and other costs. But downsizing is not always the right move for every pre-retiree, so be sure to crunch the numbers first to make sure your actual savings will offset the costs of downsizing. Especially if you are already mortgage free, there may be other ways to make your current home work for you in retirement. Another pricey item you should consider downsizing: your car. A more affordable model will give you smaller monthly payments and insurance premiums. Choose a reliable make to lower your maintenance costs as well.

A group of senior citizens playing cards together

PeopleImages.com/Getty Images

Reduce your living expenses, even if you don't downsize

The flip side of boosting your retirement savings is gradually streamlining your expenses now, in preparation for retirement. Take a close look at your monthly expenses and identify items you can do without. Start eliminating a few expenses every year until you retire. This gradual approach will let you significantly cut your monthly expenses without feeling the shock of adjustment. Often, not knowing how much you really need to live on is the biggest challenge to your retirement dreams.

Happy African American couple outside house with for sale sign in front yard

kali9/Getty Images

Leverage your home as a source of income

Keep in mind that there are many ways to generate the income you need in retirement — it does not all have to come from your investment portfolio. With 10 or more years to plan creatively, you can set yourself up to receive solid rental income by converting part of your home into a rental or investing in a multifamily residence.

Zero Creatives/Getty Images/Cultura RF

Participate in the sharing economy

Many retirees earn extra money on the side by participating in Internet-based sharing economy, which includes popular services such as Airbnb, Uber, Lyft, TaskRabbit and DogVacay. Begin participating in the services now and you may surprise yourself by earning enough to retire sooner rather than later. Perhaps more importantly, you'll learn the ropes before you really have to depend on these income streams. Remember to read any contracts carefully before you sign, and be prepared to pay taxes on the income you earn.

Couple looking at plans

Image Source/Getty Images

Lay the groundwork for joining the gig economy after you retire

If the idea of working as a freelancer or independent contractor after retirement appeals to you, start building the foundation for future gigs now. Grow your network, particularly on social media, and acquire whatever new skills and experience you will need as a freelancer. One sixty-something newspaper editor I know is building a following for his blog in anticipation of using it for online income after retirement. A book store owner is a board volunteer at the public library foundation, hoping to become its part-time CFO after retirement.

Two Businessmen Playing Chess

Digital Vision./Getty Images

Transform hobbies into profit centers

A 76-year old retiree sold his Harley (somewhat reluctantly) to his grandson over 24 monthly installments, so it was affordable for the grandson and also boosted his monthly income for a time. Of course, asset sales aren't recurring sources of income, but don’t discount creativity. There is an insurance agent who shops at Walmart on Black Friday and then sells the items he bought at a deep discount for 4x their original price on eBay. Not sure what you have to sell? Look to your hobbies. Sell those hats or that craft beer you make!