This phase occurs during the final years of the accumulation phase and should begin when you reach 50 years old or are 15 years away from retiring, whichever happens first. Now is the time to get your plan in place, making sure your finances are lined up correctly for retirement day so nothing will be left to chance. If you work for a company with a benefits specialist, arrange an appointment to become informed about the various ways you can convert your employer retirement savings into a stream of income or an IRA. Give yourself time to learn the ropes before you need to make decisions. Also, you may want to research relocating to another part of the country, downsizing, or transitioning to another type of work.
Using a tool known as "scenario planning" can be quite helpful. In this approach, you identify several attractive ways in which you could see your life playing out through retirement. You also list unlikely, but possible, eventualities that would pose serious difficulties. You come up with a plan to handle each scenario. The more "what ifs?" you consider, the better prepared you are for any eventuality.
Start learning about Social Security and your options for beginning to receive retirement benefits. Be sure to factor other income sources into your decision of when to start collecting benefits. Familiarize yourself with the basic forms of Medicare and start getting acquainted with Medicare's rules and with local insurance providers. Start following the news on changes in the law.
All this takes effort, research and preparation, and all the more so if you are still raising children.
Another important task is to understand how to reduce risks to your retirement savings and at what point to begin shifting to a more conservative mix of investments. Contemplate insurance products, such as long-term care insurance, that can help you in retirement and consider purchasing appropriate ones when you are in your 50s when your health is good and premiums may be less. One of the more difficult aspects of this pre-retirement planning phase is thinking about end-of-life provisions. The more openly the end-of-life issue and your wishes are explored with loved ones, the more prepared everyone will be when the time comes.