This week, I’m talking about your one year from retirement checklist. When you’re one year out from retirement, there are several things you’ll want to do to help ensure that both you and your finances are ready for you to take the leap into retirement. 

Today, I’m talking about the 4th item on your 1 year from retirement checklist - live like you’re retired. 

Here’s what I mean by this: Let’s say that you are exactly 1 year from retirement today. What you’ll want to do for the next 3 months is track your spending. You don’t need to limit or cut back on your spending, but you’ll need to know exactly what’s going out of your wallet every single month. 

Too many people have no idea how much they spend every month, but when you retire, knowing your spending is absolutely critical to understanding if you have the income and the assets to support your lifestyle in retirement. 

So you’ll want to track for the first 3 months. Tracking for a few months will help you average out your expenses to get a more accurate picture of what you actually spend. 

Then, once you have that 3 month average, you can use that to figure out whether or not your income sources and assets can provide the income you’ll need to sustain that spending. 

Most retirees cut back and end up only needing 60-80% of their income once they retire, so you should use this exercise to determine how your expenses will change in retirement. You might spend less on gas and parking if you’re commuting to work, but you might spend more on travel and home improvement projects now that you have the time and you’re retired. 

And then for those last 9 months, keep tracking your spending, cut out what you don’t want or don’t need or can’t afford, and ideally, try to as much as possible live like you’re already retired to see if that lifestyle is sustainable. 

If it’s not, at least you found out if you’ll need to work longer or work part time, before you transitioned into retirement. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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