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If you’re planning to retire in 2024, congratulations! You’re about to start on an incredible next stage in your life’s journey. To make the most of your available financial resources during your retirement, you’ll want to be sure you have a solid plan in place to give you a great chance of covering your key priorities.

If you take these steps before you leave your job, you can have a great foundation in place for that next adventure. Of course, 2024 is just a few months away at this point, so that makes it absolutely essential that you start on your plan now if you haven’t already.

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1. Know what you’ll be doing for health insurance

For many retirees, health insurance is the biggest new or increased cost they face once they stop working. Americans age 65 or older can qualify for Medicare, of which part A is typically free, but Part B, Advantage, Part D, and/or supplemental plans usually have premiums.

If you’re under age 65, you’ll most likely need to cover your health insurance from a different source. Some companies offer their retirees either a retiree healthcare plan or the ability to stay on the company plan until they’re Medicare eligible, albeit generally at a higher price than active employees. If yours doesn’t you may still qualify for COBRA coverage that lets you stay on the company’s plan — paying a bit more than the fully weighted cost of insurance — for at least 18 months.

If you’re not yet Medicare eligible and your former employer’s insurance can’t get you to that point, you can check out to learn where to go to buy health insurance plans for your state.

2. Get a payoff plan for your debts

Most retirees see their incomes drop once they stop drawing a paycheck. If that’s what you’re expecting, then one of the best ways to lower your costs without impacting your lifestyle is to pay off your debts.

If you’re able to get your debts completely paid off by the time you draw your last paycheck, then you can enter retirement with that much more flexibility. If you can’t, then it’s doubly important to build a plan on how you’re going to handle them once your salary stops. Either way, knowing where you stand on your debts now will go a long way toward helping you retire with a solid plan in place.

3. Figure out what your real remaining costs will be

If there’s a good part about retirement, it’s that some of your costs will likely go down. You won’t pay payroll taxes for Social Security or Medicare anymore, for instance. Plus, if you work in a higher taxed jurisdiction than you live, then stopping work will also reduce that aspect of your tax burden.

Also consider that you won’t be commuting, won’t need to maintain a work wardrobe, and won’t face work-related social obligations. In addition, stopping work may give you more time to do things like cook at home instead of eating out or doing more of your house cleaning, maintenance, and yard work. That can also help you lower your costs.

4. Understand where you’ll get “guaranteed income” from — and when

Once you turn 62, you can start to claim your Social Security benefit, though your monthly payment will increase the later you begin collecting, up until age 70. If you’re eligible for a pension, it may also have similar rules about how much you receive based on your age and/or years of service when you claim.

Likewise, if you have an annuity or a deferred compensation plan that offers you a certain amount of cash after you leave your employment, get a handle on what you’ll get and when. The better you understand your total income and expense picture, the easier it will be for you to understand what gap you’ll have to cover from your investments.

5. Get at least five years’ of expense gaps into higher-certainty investments

In step three, you estimated what your costs would be. In step four, you figured out what sort of guaranteed income you’d be getting. If you have higher expenses than guaranteed income, you’ll need money available to cover those additional costs.

As a general rule, money you expect you will have to spend within the next five years should be invested in assets that offer higher certainties than stocks do. Cash or duration-matched CDs or Treasury or investment-grade bonds are the types of investments to consider for that near-term money.

Say you expect your expenses will be $4,000 per month and you expect $2,500 per month in guaranteed income. That leaves $1,500 per month — or $90,000 over five years, perhaps a bit more to cover inflation — that you’ll want to have in those higher-certainty investments.

Anything you have above and beyond that amount can remain invested in stocks, which can potentially provide higher long-term returns, but which can’t guarantee a certain value on or before a certain date.

6. Get a plan for your time

Even though you’ll no longer be working, you will still have 24 hours in every day and seven days in every week. Many successful retirees find personally meaningful ways to fill those hours and days, such as through volunteering or working for a non-profit or another organization in a lower-stress role. Others take up hobbies or reconnect with their friends, family, and/or religious organizations.

Whatever you choose to do, be sure to have an idea about how you would like to spend your time before you finally do call it quits. You can always change your plans later, but starting out with what looks like a good set of ideas can go a long way toward helping you stay active and engaged in your retirement.

Get started now

2024 is just a few months away. If you’re really planning to retire then, you need to put your plans in place now. Once you do, you’ll have a much better picture of what your available time and money will look like, and that will help you get to a stronger start on this next exciting stage of your life.

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Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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