Sunday, March 5, 2017

Book Review: The Five Years Before You Retire

I've been doing a lot of reading lately about finance, and came across The Five Years Before You Retire by Emily Guy Birken.

One  of  the  sections discussed retirement goals and referenced Ryan Guina, finance blogger at Cash Money Life. The advice was, "There are often competing financial goals to consider in the years leading up to retirement, such as paying off debt, paying for your child's  college or wedding, and increasing retirement savings. While each financial situation is different, you can never go wrong with the two-pronged approach of eliminating debt and saving more for retirement."

According to him, the main priorities as one approaches retirement would be:

1.  Saving up to the  employer match  in a  401(k) plan,  pension,  or other employer-sponsored retirement plan.

2. Eliminating consumer debt.

3. Maxing out a Roth IRA.

4. Maxing out your employer-sponsored retirement plan(s).

Since  I don't have an employer and, thus, a 401(k) plan or any employer-sponsored retirement plan, #2 and #3 seem the most applicable in  my case.

There was a chart in the book that focused on when to do what:

Years to Retirement......What to Do

Five....Gather your financial information and find ways to increase your savings.

Five....Implement an action plan for reducing your expenses.

Five....Start generating ideas for a second income stream.

Four...Put your second income stream plan into action.

Four through One....At least once a year, reassess your pre-retirement budget and make any necessary changes.

Four through One....Work to pay off consumer debt. As you pay it off, send the "payment" to your retirement savings.

From a health care perspective, there were these suggestions:

Five....Enroll in an  individual health-care plan if you don't have health insurance.

Five....Discuss with your financial adviser your options for health insurance, disability insurance, and/or long-term care insurance; as well as opening a Health Savings Account and/or a Roth IRA to pay for future health-care costs.

Four through One...Meet with your financial adviser at least once a year to evaluate your plans for handling health-care costs in retirement.

Four...Learn the details of any disability benefits you may have.

Four....Visit multiple insurers to check prices and enroll in disability or long-term care coverage.

There was an overall five-year syllabus about the steps to take if you are five years out until retirement. Since I'm a ways off, the following items are ones that I need to still address that aren't mentioned above:

- Sign up for a "my Social Security" account at in order to easily access all of your Social Security records and information.

- Implement an action plan for reducing your expenses.

- Create an action plan for paying off your consumer debt. (I only have one bill left - with the exception of the mortgage - and I'm debt-free!)

- Max out contributions to any Roth IRA or 401(k) plans.

The book had some practical advice for people of any age. I think it would be even more relevant as I get older and are closer to retirement age.

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