How to Retire in 10 Years: A Comprehensive Planning Guide

Planning for retirement, especially when it's within the next decade, can feel like a daunting, overwhelming task. It doesn't have to be, as creating a comprehensive retirement plan can take all the guesswork out of your financial future.

With careful planning, disciplined spending, and strategic investment decisions, anyone can create their unique path toward the retirement they're looking for in 10 years. While those are some of the highlights, there are many steps you can take to gain a better understanding of your current financial status and what you'll need to do to achieve the retirement of your dreams.

Assessing your current financial situation

The first step toward retiring in 10 years is to assess your current financial situation. When you look at your retirement goals and your current situation honestly, you may find that you're a lot closer (or further) than you previously thought. There are a couple of steps you can take to get a complete understanding of your current financial situation:

1. Evaluate retirement savings. Start assessing your current financial situation by looking at your retirement savings. This can include IRAs, 401(k)s, and any other investments you've set aside specifically for retirement. Add up the total balance of all the accounts to get a clear indicator of your current retirement savings.
2. Identify sources of income. While you may not have your main source of income during retirement, you might have a pension or Social Security payments. Identify any sources of income you'll have during retirement, including those listed above or any others, such as income from a rental property or a part-time job.
3. Pinpoint your retirement goals. Identifying your retirement goals can be exciting, as it can be when you finally become serious about realizing your retirement. Your retirement can be anything you want it to be — traveling the world, buying a vacation home, or just living a more comfortable life at home. No matter how you want to spend your golden years, defining what you want to do with them is essential in building a plan. If you plan on living modestly post-retirement, you may not need to focus on saving as much as a world traveler.
4. Set a target retirement age. Once you've identified how you'd like to spend your retirement, you can choose when exactly your retirement will begin. Your ideal retirement age is based on several factors, mainly the three listed above. If you want to live a lavish lifestyle in your retired years and don't have the biggest nest egg to support yourself, it might benefit you to stay in the workforce a little longer to build it up.
5. Talk to an expert. If you ever have any questions as to how much you might need during retirement or how much more you'll need to save before you can retire, it can be a good idea to talk to a financial expert. They can help gauge how much you might spend while you're retired and how much money you'll need to achieve that. Websites can often provide valuable tools and calculators that can give you an insight as to how much you might need when you retire, such as this page that helps you figure out how long you might live.

Creating a retirement plan for the next decade

When you have a clear understanding of your current financial situation, the next step in preparing for retirement is to create a plan for the next decade. Retirement plans are designed to increase your savings, minimize your exposure to financial risks, and achieve your retirement goals.

The first step in creating a plan is setting your retirement goals. This is similar to assessing your current financial situation, as it involves defining specific goals and financial priorities you want to fulfill during retirement. If you've always wanted to buy a cabin in Maine for vacation twice a year, this is a great time to plan on the dollar amount you want to save.

The second step is to create a solid budget to work with. With changing income streams and new financial needs, it's important to have a good understanding of just how much money you'll be spending during retirement. Some of the most important and common costs to consider include mortgage or rent payments, health care, transportation, and vacation-related activities. Your budget during retirement should also reflect your goals. If making charitable donations is important to you, factor it into your budget ahead of time.

Breaking down your retirement plan into milestones and timelines can be a great way of making it easier to follow. A 10-year plan can be intimidating, but having three-month intervals with goals and milestones can make the journey easier, more rewarding, and more enjoyable. Establish incremental targets that align with your larger retirement goals. These targets can be anything from paying down debt, increasing savings contributions, or a combination.

The final step in creating a reliable and comprehensive retirement plan is to optimize your retirement accounts. When you're about to retire, it's important to maximize the growth potential of your retirement savings accounts by leveraging tax-advantaged investment accounts such as IRAs and 401(k)s. These accounts can often offer you different tax-related benefits as you approach retirement.

Another great way to optimize your retirement account is to diversify your portfolio. You can mitigate risks and increase potential gains by creating a diverse portfolio with resources across different asset classes. As the market changes and fluctuates, regularly review your portfolio to ensure it still reflects your retirement goals.

How to close the retirement savings gap

Many soon-to-be retirees face a retirement savings gap or a gap between the amount of money they'll need to retire and how much they're projecting themselves to have. With 10 years to go, it's more important than ever to find a way to bridge that gap and acquire the amount you'll need for the retirement you're looking for.

There are a couple of surefire ways to close a retirement savings gap. One of the most reliable is to increase your savings rate. This is a straightforward method that involves increasing the rate at which you're contributing to your retirement accounts, such as a 401(k), IRA, or another tax-advantaged account. By maximizing your contributions, you can take advantage of compound interest and any potential matches your employer offers.

Increase your contributions by minimizing your spending. This is an effective, albeit somewhat difficult strategy that involves you redirecting funds from discretionary spending, such as dining out, toward your retirement and savings accounts. The best way to make sure you're spending effectively is by creating a budget. Budgets can give you a clear amount you can spend in a variety of categories, providing you with a path toward retirement.

Another great way to close the retirement gap is to create automatic contributions to your savings accounts. Before your pay is deposited into your account, set aside a predetermined amount for a separate account, such as a 401(k). This can help you avoid the temptation of spending money you had earmarked for your retirement account, and it can also take the hassle out of remembering to transfer funds altogether.

Just because you're retired doesn't mean you can't generate income. Starting a side business, getting a part-time job, or even freelancing are all great ways a retiree can earn a little more money during their golden years. Supplementing your retirement funds with an additional stream of income is a great way to make sure you're closing the retirement savings gap.

How to retire in 10 years

If you take the time to create a comprehensive plan, you'll be much more likely to retire the way you've always wanted to. It's not hard to create a retirement plan — all you need to do is assess your current financial situation, set focused retirement goals, and close any potential retirement savings gaps that come up.

Creating a retirement plan for the next decade involves setting identifiable goals with milestones that work for your retirement timeline. By optimizing your retirement accounts, increasing savings, and decreasing spending, you can maximize your potential growth opportunities and retire on time.

If you're eager to learn more, start your journey with our intuitive fixed annuity guide.

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