The last five years before you retire is a critical point in time—at least when it comes to retirement planning. That's because you must determine whether you can truly afford to 𝔉quit working. This determination will hinge heavily on the amount of preparation you've done𓄧, and the results of that preparation.

If you are 澳洲幸运5开奖号码历史查询:financially prepared, you may just need to maintain your program and 澳洲幸运5开奖号码历史查询:continue𒐪 on towards your ꦫretirement goal. If you are not 🐼prepared, you may be looking at more than five years—or a modification of your planned retirement lifestyle.

Let's look at an action plan you can use to 澳洲幸运5开奖号码历ಞ史查询:determine your level of readines൲s for retirement as you start this five-year stretch.

How Much Money Will You Need?

Failing to do a proper retirement needs analysis is one reason many people find themselves struggling financially during their post-work life. At its most basic level, an analysis of your retirement needs might consist of multiplying your current income by some recommended percentage, such as 75% or 80%. That's based on the assumption that your expenses are likely to go down after you retire, which unfortun▨ately may not be the case.

To get a more realistic picture of how much money you'll need for retirement, your analysis should take a holistic approach. This means considering all aspects of your finances, including items that could affect your 澳洲幸运5开奖号码历史查询:cash flow and expenditures.

Below are some questions to ask yourself.

How Long Do You Expect to Be Retired?

With half a decade left until your planned retirement date, the ke⛄y objective is to determine if you can afford to retire by th꧙en. To make this determination, you must first consider how long you expect to live.

Unless you are clairvoyant, there is no way to be sure. However, you can make a reasonable estimate based on your general level of health and family history. For example, if your family members typically live into their 80s and you are in good health, then you may want to assume that you'll still be around at that age.

Do You Need 🍃to Insure Your Assets A꧑gainst a Long Illness?

While you're pondering life expectancy, also consider whether your family has been prone to costly, long-term illnesses. If so, insuring your retirement assets should be high on the list of items to include in your analysis. You may want to consider 澳洲幸运5开奖号码历史查询:long-term care (LTC) insurance to pay for nursin✱g home ⭕care or similar services should you eventually need them.

Having to use your retirement savings to pay expenses could wipe out your nest egg in no time. This is especially true if your assets are significant enough that it's unlikely you will qualify for 澳洲幸运5开奖号码历史查询:Medicaid-supported nursing hom💫e care—but you're not so wealthy that your assets will𝓰 easily cover whatever happens to you. If you're married, consider what would happen if one partner became sick and drained the savings intended to support the other partner after a spouse's death.

What Will Your Expenses Be During Retirement?

Projecting your expenses during retirement can be one of the eas💜ier parts of your needs analysis. This is as simple as making a list of the items or experiences you expect to spend money on and determining how much they are likely to cost.

One way is to use your current budget as the starting point. Then eliminate or lower the expenses that will no longer apply, such as the gasoliꦐne you use to commute to and from work, and add or increase the items that will represent new expenses during retirement (such as more leisure travel).

How Much Income Will You Have?

Next, add up the income you are gꦑuaranteed to recei♊ve in retirement. This includes:

• Your monthly Social Security benefits. You can get an estimate of your Social Security benefits by using a calculator at the 澳洲幸运5开奖号码历史查询:Social Security Admin🌃istration (SSA) website.
• Any pension income from current or former employers.
• Any funds coming as regular payments from an annuity you own.
• Any property that you plan to sell or collect ongoing payments from to help finance your retirement, including 澳洲幸运5开奖号码历史查询:real estate, 澳洲幸运5开奖号码历史查询:royalties, or rental properties.
• Once you reach the age of being subject to 澳洲幸运5开奖号码𝓀历史查询:required minimum distributions (RMDs), get an estimate of how much you will be required to take out and add this to your guaranteed income for that period.

Also, inventory any other savings and assets you have that you could draw on in retirement:

• Funds you have saved in retirement savings accounts, such as 澳洲幸运5开奖号码历史查询:Ind💖ividual Retirement𒁃 Accounts (IRAs) and 401(k)s.
• 澳洲幸运5开奖号码历史查询:Inherited IRAs and other inherited retirement accounts. Be aware that 澳洲幸运5开奖号码历史查询:distribution rules for inherited retirement accounts changed with the Setting Every Community Up for Retiremenඣt Enh🐻ancement (SECURE) Act. With the SECURE Act, certain non-spouse beneficiaries have 10 years from the death of the retirement account owner to empty the account.
• Money in other savings or investment accounts.
• Your 澳洲幸运5开奖号码历史查询:Health Savings Account (HSA), if you have one.
• The value of your home or 澳洲幸运5开奖号码历史查询:other real estate property.
• Any other valuable property, such as art.
  

Doing the Retirement Math

Once you have established your projected expenses and the amount of income you will regularly receive, the next step is to determine how much additional money you'll need to draw from retirement savings and other assets to support yourself.

Below is an example of that calculation, based on the following assumpti𒈔ons:

• This person plans to retire in five years.
• Their annual retirement expenses will be 75% of their pre-retirement income.
• They expect to spend 20 years in retirement.
• Their current annual income is $250,000, and they will receive an estimated salary increase of 5% per year.
• Their estimated income from Social Security is $24,528 per year.
• Their current retirement savings balance is $1.5 million, which they project will grow at a rate of 8% per year.

In this case, the results look like this:

Even though our hypothetical pre-retiree has a higher-than-average income and retirement savings, the calculation shows that they are on track to replace only about 64% of their pre-retirement income, a good deal less than the 75% replacement rate they were aiming for. That means they'll have to make some adjustments if they want to retire in five years.

Your particular facts and circumstances will likely produce different results. For instance, do you have more or less saved? Will you get more or less from Social Security? Will your income from other sources be higher or lower? Is your projected time in retirement longer or shorter? All of these factors could change t🌞h꧅e bottom line.

Are You on Track or Off?

If the result of your retirement needs analysis shows that you are on track, congratulations! You'll still want to keep adding the recommended amounts to your savings and 澳洲幸运5开奖号码历史查询:rebalancing your portfolio as necessary so 🌠that it's suitable for your retirement horizon.

If the results of your needs anal𓆉ysis show that you are not financially prepared to retire in five years, here are some things t꧂o consider:

• Could you make some changes to your planned retirement lifestyle that would significantly reduce your annual expenses?
• Would you be able to increase your retirement account contributions enough over the next five years so that they'll produce sufficient income once you retire?
• Could you work part-time in retirement and bring in additional income?

If there isn't much you can do to reduce your expenses or increase your income, your best option may be to put retirement off for a few more years. The longer you work, the more time you'll have to set money aside, and the fewer years you'll need to rely on your retirement savings to support yourself.

The Bottom Line

Though it's always a good idea to review your retirement accounts and plan on a consistent basis, the last five years before your intended retirement date may be the most important. That's because things can change, whether that's your job, family situation, or your own goals. At this point, you'll know whether you're on track, and if retiring is still an option. Be prepared, though. If the stars don't align, you may need to make changes and alter your retirement date. You may also need to make some other adjustments, like rebalancing your portfolio.