To be fair, I did pay off my credit card debt before I retired, but that’s because I was self-motivated. I didn’t get many referrals. I just knew I had better clear that debt before the full-time payments started.
3. Consider a health savings account
Unfortunately, by the time I fully realized how powerful a health savings account (HSA) could be in retirement, it was too late for me to build one. Maybe it’s not too late for you. More than two in five workers with a household income of less than $50,000 are not saving for health care costs in retirement, according to a 2021 report by the Trans-American Center for Retirement Studies.
You can open an HSA if you have a high-deductible health plan and no other insurance. While you’re working, you can invest on a tax-free basis, and unlike a flexible spending account (FSA)—income you set aside for medical expenses but must use or lose annually—HSAs can be set up and moved year. – year after year, to retire.
You can withdraw that amount, tax-free, to pay for qualified health care expenses not covered by private insurance or Medicare, including deductibles and co-pays (although if you have Medicare, you can no longer contribute to your HSA). After age 65, you can also take withdrawals for non-medical expenses, though you’ll pay regular taxes on the money.
It’s no secret that healthcare becomes more important and expensive as we age. Having a well-funded HSA can be a powerful tool.
4. Narrow down any places you’re considering moving to
It’s always a good idea to spend some time in a place where you can retire. Familiarize yourself with the interior and provisions. My wife and I managed to do that, but more by accident than wisdom, we landed in our “retirement home” in Staunton, Virginia, two years before we retired.
We had visited this small town in the Shenandoah Valley many times when we lived in Northern Virginia near our jobs in the Washington area. Working remotely during the 2020 pandemic lockdown, we decided to take a look at the houses there. We fell in love with the first person we saw and, with the blessing of our employers, made the move.
Know what you’re getting into before you settle on a destination—not just what checks your boxes (in our case, mountain views, and lower property taxes and auto insurance than in the crowded Northern Virginia market), but what you might be missing out on. and what trade-offs are involved.
For example: Do you eat out regularly? Beware of food taxes in your new hometown, especially if it is in tourist areas. Looking for good pizza or Italian food? You may not find it in your retirement town (we haven’t yet). Do you rely on close proximity to Wegmans, Walmart, Costco, or other major retailers? Your new city may not have one. Have you vowed never to live in a community with a home owners association? Me too – until I did.