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If you’re a decade or so from retirement, chances are you’ve spent lots of time envisioning what life will be like once you stop working. If you haven’t done a lot of planning, perhaps you’re worried about whether you’ll be financially prepared. Fortunately, a decade is plenty of time to alter your trajectory if necessary.
Ten years out is a good time to ramp up your savings, get rid of your debt and reconsider your portfolio, according to the National Association of Personal Financial Advisors, the largest fee-only financial advisor group in the U.S.
Here’s NAPFA’s list of the eight items you should address today to help get you ready for retirement in 10 years:
- Be tax efficient with your investments. For example, you should defer as much of your salary as you can to your defined contribution plans.
- Save to an emergency fund and stay aware of your company’s financial situation. Companies are prone to reorganizations and layoffs, and longtime workers can be vulnerable.
- Brainstorm any big-ticket financial commitments for the next 10 years, such as taking care of an elderly parent, and consider how such expenditures might affect your ability to retire when you’d like.
- Take a hard look at any major debts that you have and develop a 10-year plan to eliminate them.
- Reallocate your portfolio based on your earnings timeline with a focus on performance, risk and expenses. Decide when, or whether, you should shift to a more conservative asset allocation.
- Review what your tax obligations may be with your current investments and use tax-optimization strategies to boost your savings.
- Review your estate documents to ensure the language is still accurate. For example, are the named trustees and beneficiaries still alive and capable?
- Research when your stock-based compensation might expire and what stock awards you can retain after retirement.
With 10 years to work with, it’s not too late to save enough to fund a reasonable retirement. But without a smart plan in place, it might not be the retirement you imagined. If you need help tackling the items on this list, consider working with a professional. You can find fee-only planners through NAPFA.