Retiring in 2025? 3 Important Moves to Make Now

Retirement is the largest financial goal most people will ever have. We tend to focus on the dollar amount you need to cover your costs, but there's more to it than that. You need a strategy for balancing your immediate financial needs with your long-term goals. You have to decide which accounts are best for your savings and which investments can help your money grow quickly without exposing you to too much risk. Then, you have to make adjustments over time to keep yourself on track.

If you plan to retire in 2025, those years of preparation are coming to an end. However, reviewing your plan one last time is crucial to helping your savings last as long as possible. Here are three important things to do before heading off to your retirement party.

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1. Review your financial plans for retirement one more time

It's good practice to review your financial plans for retirement one final time to ensure you have an adequate amount of savings. You can't know exactly how much you'll spend in retirement, but you can get a rough approximation based on your current annual expenses and your life expectancy.

One popular rule says you can withdraw 4% of your savings in the first year of retirement. In subsequent years, you adjust this amount for inflation. This is supposed to help your savings last you at least 30 years. If you plan to follow this rule, figure out what 4% of your savings would be and make sure you're comfortable living off this amount for your first year of retirement.

If this isn't feasible, you may want to remain in the workforce a while longer or revisit your retirement expenses to see if there's anything you can scale back. This might be disappointing, but it's better to do this now than to retire as scheduled and outlive your savings.

2. Decide when you'll claim Social Security if you haven't already

Some people sign up for Social Security before they retire. If you're one of them, you already know how much you can expect from your checks per month. But those who haven't applied yet will need to estimate this so they know how much of their monthly retirement expenses they'll have to cover on their own.

Your benefit depends on your work history and your age when you sign up. The longer you wait to claim benefits, the larger your checks will be. You qualify for your maximum benefit at 70, but you can sign up as early as 62 if you'd like.

Signing up early generally works to the advantage of those with short life expectancies and those who lack significant personal savings. However, if neither of those applies to you, you may get a larger lifetime benefit by delaying your application.

You can determine the best age to claim Social Security for your life expectancy by looking at the benefits calculator tool in your my Social Security account. Once you've logged in, you can view benefit estimates for every claiming age. Choose a few you're considering and multiply your estimated monthly benefits for these ages by the number of months you expect to claim benefits.

For example, if you think you'll get a $2,000 monthly benefit if you apply at 67 and you expect to live to 87, your lifetime benefit would be $2,000 x 12 months x 20 years, or $480,000. Unless your life expectancy or finances prohibit it, choose the age that will give you the largest lifetime benefit overall.

3. Have a backup plan

Retirement is a big transition -- and not just financially. You're likely going from spending 40 hours per week at a regular job to suddenly having your days free to do whatever you'd like. It sounds great on paper, but some retirees find they feel lonely and lack a sense of purpose once they're no longer working.

Others enjoy retirement but find that their retirement expenses don't line up with their original estimates. They can drain their savings more quickly than they expected, putting themselves in danger of running out of money prematurely.

There's no telling whether either of those things could happen to you right now, so it's best to have a backup plan just in case. Perhaps you could find a part-time job to give you an opportunity to socialize and supplement your retirement savings. Or maybe you decide to forgo some of the trips you'd planned in retirement to save money.

Once you actually retire, schedule check-ins with yourself every few months to see how your expectations compare with reality. If you notice things are getting off track, enact your backup plans to keep things from getting worse.

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