For most Americans retirement is a phase that they look forward to, but it can be a financially stressful period as well. Retirement is a phase where your expenses depend on your savings and IRA plans. Making your retirement phase stress-free lies in your current lifestyle and better financial planning. It doesn’t matter when you choose to retire; it’s always better to have financial goals in mind and be prepared for the retirement financially.

“Retirement, a time to enjoy all the things you never had time to do when you worked.” ~ Catherine Pulsifer

So, don’t spend your retirement phase by worry about finance; instead, enjoy this golden phase by chasing your passion. You need to reach these 4 important financial milestones before retirement to be stress-free and financially independent when you retire.

4 Important financial milestones to aim for before you retire:

1. Target 3 months – save enough for that period!

By the time you retire, ideally, you would have managed to have a cache of money in your savings account with the help of IRA or 401(k). But apart from this nest egg, it’s wise enough to stock up a good amount in your emergency fund in time of retirement. This emergency fund would be helpful to cover your three months of living expenses once you retire.

Now you must be thinking why I require an emergency fund if I have money in my retirement account. The main purpose of this emergency fund is to provide you immediate access to cash for any unforeseen need. In contrast, the money you had saved in your IRA or 401(k) account might be invested and would take a considerable span of time to liquidate those investments and get that money in your hands. This means you don’t have to hurry to sell those investments at a low rate for an urgent need of money as you’ll have money to cover up your expenses for time being. Conceivably, you will have other sources of income, but what can be more comfortable than instantly accessing money through your personal bank account.

2. Get rid of the hefty credit card debts and become stress-free

The last thing anyone would want to worry about during retirement is the debts. It’s never a good idea to have hefty credit card debts over your head especially during retirement. If you have a heavy balance on credit card debts, it’s essential to get rid of them before you stop working.

If you’re debt-less during retirement, you can be stress-free and enjoy your retirement phase. While you’re on a fixed income, it would be challenging to hold an amount in your monthly budget to clear the debt. I try to chip away the debt while you’re working, you will have a stress-free and financially flexible future.

3. Clear all mortgage payments soon

Most people with low income undergo financial stress since they have mortgage debts during retirement. A recent survey by Consumer Financial Protection Bureau, 30% of the homeowners aged 65 & above, kickoff retirement with mortgage debt. It totally depends on you to plan well for your retirement and enjoy the golden phase of life with a less financial burden.

It’s better to clear off the mortgage debts while you’re working so that you can stretch your budget for your passion after retirement. You need to keep in mind another important fact, that once homes age, their maintenance cost also takes a lead. You must evaluate the maintenance cost as well in the budget after retirement, so try to pay off the mortgage debts while you’re working. Since you’re clear off mortgage debts, you can cover up any additional charges incurred for the house.

4. Look for accumulating enough money that can replace 80% of your yearly income

Aim to accumulate a large chunk of money which can cover your expenses post-retirement. But what is the exact figure and how much should I save? You need to save at least 80% of what you earned previously times the number of years you expect your retirement to last (on a safe note, consider it to be 25-year retirement and plan accordingly. But only savings won’t be enough to accumulate such a huge chunk. Social security benefits, investment plans, IRA, 401(k) plus some other means of income might help you cover the money you require for your retirement.

Summing up:

For a comfortable life post-retirement, you need proper savings to cover up your expenses. If you’ve clogged enough money that is close to your target or approximately closer, you can be comfortable enough to kick off your retirement. Having enough savings in your retirement account would give you a confidence and you can use this money to handle a comfortable retirement lifestyle. If you aim at reaching the 4 above-mentioned milestones then you can have a stress-free retirement.