My dad knew his retirement date the day he started his working career (not the year or month – but exact date). Working in the public sector, going by retirement age and with no plans to make any drastic changes in life, his retirement planning was … let’s say – quite simple! However, with more and more people going the F.I.R.E way and becoming global citizens or choosing exotic locations to retire, this is not so simple anymore.
In this blog we will discuss what are the most important things to do ONE YEAR before you retire to life of your dreams.
This is based on our situation (retiring in a country other than the country of our birth, citizenship, and working life) and influenced by our experience and learnings (we had to move our retirement goal by a few months). Different actions might apply to different people but we believe this is a comprehensive list of actionables where at least a 1-year timeframe is required.
1. Decide on the Place to Retire
Retirement is a good time in life to re-evaluate many decisions you made in your life so far (ok, that was a bit too much – don’t start looking for another partner!). We are talking about “Location Location Location” – i.e. your retirement base.
Most of the time we chose to stay at a place because it is convenient for work or for kids’ education. But now ask yourself – “Why I am staying in this country/city/house?” – if you are in love with the place or have other reasons to not move, its fine. But if those reasons are not relevant anymore, explore your options (if you are confused, you can read our blog on <How to choose a location for living your retired life>).
While most people have decided their retirement base years in advance, 1 year before retirement is a good time to revisit your choice and take some steps to make it a reality. Depending on whether you are thinking of moving to another country, city, or just to the countryside in the same city – some of the next steps may or may not be relevant to your planning.
2. Check Visa/Tax/Property Regulations
This is obviously relevant for people who are planning to move to another country, either permanently or temporarily. Use this time to explore different options and gather information on important factors like visa requirements, tax implications, lifestyle, country dynamics. While this is a personal choice, these factors can open up or limit your options – yeah, not everyone can or wants to move to Portugal or Thailand.
Even if you have pretty much figured out where to move, getting documents in place can take time. So, we suggest doing the exploration phase 12 months in advance, start with getting documents in place and if possible, apply for the visa 6 months before retirement. This will give you enough time to prepare for any surprises (and the best thing is, if you have done your research well, there will be no surprise).
3. Renew or Revisit Your Housing Contract
Again, if you are moving out of your current place – be it going to another country, city, or just moving across the street to be closer to your favorite pub, you will have to do some actions to make sure that you are move-ready.
If you are living in your own house, maybe you plan to sell it if you are moving away permanently or give it on rent for the time you are busy exploring the world. In either case, you need to start making your house ready for sale or rent – talk to the agents, do renovations (if needed), de-clutter your house (we cover this in detail as another step and plan to write a blog about this as we believe this is an important “refresh” moment in your life).
On the other hand, if you are living in rented property or office accommodation, you need a place for yourself – another rental or buy. Both these options would mean that you need to trigger a series of actions – starting with giving notice for your current house or making sure that your rental period is aligned with your date of movement. It could also be that you need to rent out for a shorter period to fill the gap between the current contract and your retirement move.
Make sure you do not sign any long-term contract which binds you to that place or makes the move expensive by coming out of that contract.
4. Stress Test Your Financials
While the above steps are related to moving and easing into your retirement, the financial check is important to re-validate your business case for (early) retirement or check your assumptions. While you may not earn (regular) income, your expenses don’t stop. Yes, you still have to pay your 3rd child’s university fees next year!
One of the most important things you need to look into is your 3-year cash flow situation (starting from the year of retirement). Once you do not have regular income which is your main source of cash-flow, you have to make sure that you have enough cash (or liquid assets) to take care of big or unplanned expenses. The idea is to have assets equivalent to the next 2 years of your expenses in the most liquid form.
Also, work out some what-if scenarios to stress-test your planning – the idea is not to overthink and analyze but to identify if you need to make any changes in the next few months to align with your retirement day planning.
This is also the right time to start with or accelerate your passive income – this will be key to your cash-flow situation during retirement years. <How we doubled our passive income in 3 years?>
5. Have a Plan to Clear Your Dues
Along with other targets for working out our retirement timing, we also aimed at “Zero debt”. If you are familiar with our philosophy or way of life (link to the About Us section), we aim to live on minimal debt. We believe in clearing out our credit card payments before they are due to avoid exorbitant charges or to avoid living beyond our means. However, sometimes it makes financial sense to finance your investments with debt (like a house mortgage) then with your own cash. However, we decided to clear all our debts (including mortgage) as we move towards Financial Independence.
If this is also your target (and if not, make sure you consider this in your cash-flow and retirement planning), you need to plan on how to clear your major debts before or during the first few years of retirement.
6. Get a Family Health Insurance
One of the most underrated benefits of working life (specifically corporate jobs) is the health insurance package. Believe me, you don’t know it exists till you encounter your first major health issue and at that moment, you are either grateful to your company or cursing yourself for not negotiating a better package. Whatever is the case, it all goes away the day you leave your job.
So, this is the right time to start exploring health insurance options specific to your situation – country/age/medical state/family history etc. Also, if you have been postponing any non-urgent medical treatment, get it done while you have insurance coverage.
This could have a direct impact on your FI number – increasing your expenses by insurance premium or by medical expenses if you decide to build up your insurance.
7. Think and Prepare for What You Are Retiring To
While most of the people dream about their retirement days and especially the feeling of not doing a regular job and having enough time, they actually do not give enough attention to what they are going to do with time on hand. The stereotypical image of lying at the beach, sipping cocktails, and reading books sounds amazing but don’t think you can do that 24×7.
In other words, people fail to plan for what they are “Retiring to”.
Make a list of your hobbies and passion that you did not get time for in the last x years.
Make a list of places you would like to travel (we put this first on our priority list and booked a World trip – starting on the day we both retire). If you need some tips on how to plan it, check out the blog <>
Maybe you would like to learn some new things in life.
If you are planning to continue with some work post-retirement (like consulting, blogging, etc), this is also the time to start doing some prep work now (networking, taking a course, certification, etc).
8. Discuss with Your Family and Friends
Don’t give them a surprise one day – maybe you are prepared but they are not 😊. Of course, if you are planning to retire early, maybe you are not able to disclose to everyone (especially your colleagues). That is where your family and close friends can help you. Talk to them about why you are doing it, what are your plans (basically about all these steps) and get their opinion or guidance. It is better to do it one year in advance or as soon as you have made up your mind.
We realized that when we started talking about our early retirement plans, our friends also thought … hmm, I also need to think about all this. So you are not only helping yourself, but you are also helping others. A practical benefit for such discussion could also be that your friends can explore the same place you are retiring to … now that sounds like fun.
9. De-clutter Your Shelf
This is especially important if you are moving after retirement or planning to travel – and it is not just about clearing your physical space. It is also about learning to let go – we all have our favorite collection (I had over 300 books and Mr. Nomad had over 300 caps!) – but this is the right moment for refresh in life. It does not take much time in clearing out the closet and giving away the stuff, what takes time is to build up the mindset to let go and not buy new possessions.
