For most of your life, saving for retirement probably wasn’t a high priority. But as the years count down on your career, nerves set in and rhetorical questions start flooding your head: Have I saved enough? Did I invest too aggressively? Do I have the right kind of insurance?
Planning for retirement isn’t the most straightforward process, but these ten steps are a great place to start:
1. Assess Your Situation
To build an accurate retirement plan,determine how much you have in the bank. Calculate your total net worth by subtracting what you owe (e.g., debt, mortgage, and credit card balances) from what you own (e.g., cash, retirement accounts, and assets). You’ll want to have a clear picture of your financial status before you chart your retirement journey.
2. Project Your Future Expenses
According to Investopedia, a majority of people believe that their annual spending during retirement will be 70% to 80% of their past expenditures. However, you must also factor in expected (and unexpected) expenses that may occur. You might decide you want to travel or buy a new car, for example. Make a list of all your planned costs so you can build those expenditures into your budget.
3. Run A Tax Projection
Tax projections help inform how to allocate your existing cash flow so you can minimize taxes today and during retirement. Whether it’s bunching charitable contributions using a donor-advised fund or making partial Roth conversions, the years leading up to retirement are optimal for maximizing your tax planning. In addition, business owners may find they can accelerate or delay certain income and expenses to stay below net investment income tax thresholds.
4. Consider Partial Roth Conversions
The decade before retirement is crucial because it’s the best time to manage current and future taxes. If a large portion of your nest egg resides in IRA accounts, for example, you’ll have significant required minimum distributions subject to income taxes that eat away at your hard-earned savings. With partial Roth conversions, however, you can take money out of your IRA, pay taxes on it right away, and have a tax-free income source. You can even convert smaller amounts over time instead of paying the taxes all at once.
5. Take Advantage of Tax-Deferred Accounts and Catch Up Contributions
Every year, the IRS determines the maximum contribution limits for IRAs and 401(k)s. In 2020, the maximum contribution for 401(k)s will be $19,500 and $26,000 if you’re 50 or older. The annual contribution limit for Roth and traditional IRAs, on the other hand, will be $6,000 if you’re under the age of 50 and $7,000 if you’re 50 or older. You should take advantage of these new, higher limits that allow you to put more money into your retirement accounts and reap higher rewards later—especially if your employer matches contributions.
6. Reduce Your Debt
In 2016, the median debt of households headed by someone 65 or older was more than twice the total it was in 2001. To avoid debt hanging over your head during retirement, begin paying it off now. Start with high-interest debt, like credit card balances, personal loans, or mortgages. But don’t use a lump-sum withdrawal from your retirement accounts to pay it off—the taxes you’ll pay will likely be higher than any interest savings.
7. Sharpen Your Retirement Budget
Instead of only budgeting for retirement, consider a spending plan. A spending plan allows you to set aside funds for luxuries such as travel or shopping. Envision your dream retirement as well as what it will cost. Then, you can set aside the amount you’ll need to fund your dream. Without a spending plan—or any retirement plan—you are far more likely to run out of money as the years pass.
8. Understand Your Healthcare Options
It’s almost inevitable that you’ll have to pay healthcare expenses during your retirement. According to Fidelity Investments, the average 65-year-old couple will spend about $11,000 on healthcare in the first year of retirement. To avoid those out-of-pocket costs, pick a healthcare plan that offers you the best benefits. Medicare kicks in at age 65, but it often doesn’t cover everything. Also consider utilizing a health savings account, which provides unique tax breaks and makes covering healthcare costs in retirement easier.
9. Educate Yourself on Key Issues
It’s never been easier to find information on retirement planning and investing, but it’s also never been more difficult to find reliable and unbiased information. Luckily, some resources can help. If you learn best by reading, check out a content aggregator like Abnormal Returns. It’s an excellent way to sort through the thousands of finance-related blog posts published every day. If you’re not much of a reader, a reputable retirement podcast allows you to gather information while you drive, exercise, or cook. These resources will help you stay up to date on issues that may affect your retirement plan.
10. Get Professional Advice.
Perhaps the most important step you can take before your retirement is meeting with a financial advisor. An advisor can help you with the above steps and other potentially complicated or stressful retirement elements. Ultimately, an advisor can ease your burden and assuage your worries, ensuring you have the best plan to live out your dream retirement. Even if you already have an advisor, you owe it to yourself to meet with him or her regularly to discuss your plans.
Planning for retirement is critical—especially in the decade leading up to it. Follow these steps to put a strategy in place that allows you to embrace your pending retirement rather than dread it.
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This post first appeared on Forbes.com.