For many pre-retirees, planning their future is all about the big decisions: how much is enough? When should you claim Social Security? Which accounts should you use first? While these are important questions to ask, it can be easy to overlook one of the best things you can do for your future self: get your finances into a healthy routine.
If you’ve ever done the math on how much a daily coffee habit costs you every month, you know exactly what we mean! But this kind of big impact doesn’t just come from small expenses. You can harness the same cumulative effect by implementing smart financial routines.
Here are our top picks for small, healthy habits that can pack a punch after you’re retired.
Test-Drive Your Retirement Income
When was the last time you studied for a big test? There’s a reason why practice tests are so valuable when prepping for a major exam. They can help you identify areas where you’re proficient and where you need to keep working. So why not give yourself a practice test before retiring?
For pre-retirees, “test-driving” your future retirement income can be a helpful way to stress-test your budget. For three months, try living on the amount you expect to receive from Social Security, pensions, and investment withdrawals. Ask yourself:
– Am I comfortable living at this income level?
– Do I need to adjust any spending areas?
– Do I have room to build better money habits before retiring?
Think of it as a no-risk practice round, providing the opportunity to hone your post-retirement budget and shore up any accounts or habits that could use it.
Get Ahead by Saving Ahead
Many pre-retirees naturally begin to spend less as kids grow up, mortgages shrink, and work-related costs decrease. Once you’re retired and on a fixed income, it can be more difficult to allocate cash toward large, irregular expenses, especially if they’re a want instead of a need. Even if you have enough retirement income, it can be psychologically difficult to spend “fun money” when you’re no longer earning an income. That’s why now is the perfect time to turn excess cash reserves into intentional planning.
We call this funding Bucket 4: Your Bridge Fund. Intentionally allocating funds for the fun stuff helps empower you to use that money as intended rather than letting it get absorbed by practicality. Think home projects, dream vacations, big celebrations, or even giving to loved ones.
This simple, healthy habit can help you enter retirement with financial clarity and excitement. It’s a great way to be Smart About Money™.
Uncomplicate Your Financial Life
Before you can Retire To Your Happy Place™, it’s helpful to make sure that place is happy. A great way to do that is by finding ways to simplify your finances, so you can spend less time doing what you have to do and more time doing what you want to do.
- Automate your Money – Set up automatic bill pay, automated savings transfers, and recurring charitable donations to reduce decision fatigue and avoid missed payments.
- Consolidate Retirement Accounts – Many pre-retirees have multiple 401(k)s or IRAs from previous employers. Consolidation simplifies monitoring, reduces paperwork, and makes it easier to manage RMDs later.
- Cut Digital Clutter – Unused subscriptions can quietly drain your budget. As you go through your bank statements to set up automated bill pay, do a subscription audit and cancel what you don’t use.
Think Beyond Your Co-Pay
Healthcare is a major part of retirement planning. Medicare can be complicated, and plans change annually, not to mention evolving health needs that come with advancing years. That doesn’t mean you have to brace for an inevitable post-retirement curveball.
Start by reviewing annual Medicare changes and comparing prescription plans, while also tracking your medical expenses throughout the year. Knowing exactly how much you spend on doctor visits, procedures, and medications each year helps you determine what coverage best fits your needs during Medicare enrollment. If you have a Health Savings Account, make a habit of contributing regularly, saving receipts, and submitting reimbursements for eligible costs; check for HSA-qualified medical expenses here.
It’s also a good idea to anticipate long-term care needs. You may have misconceptions about long-term care insurance or not know where to start regarding Continuing Care Retirement Communities (CCRCs), which is why starting now can be helpful.
Divide and Conquer—Together
For many couples, it’s common for one partner to handle most of the financial responsibilities. This arrangement works—until it doesn’t. Around 63% of women will outlive their spouse, and more than half report that they leave investment and financial planning decisions to their husbands. This means many women find themselves financially overwhelmed and ill-equipped in the wake of losing their partner.
That’s why we recommend that couples use their pre-retirement years to establish shared financial routines. Schedule a monthly financial date night to review your budget together. Rotate who’s responsible for paying the bills each month (even if they’re set to auto-pay, you should both know what is being spent, and when). Talk with your financial advisor and tax preparer together, ensuring they both have access to your important financial documents.
Plan a “Faux-cation” in Your Potential Retirement Spot
Thinking about moving in retirement? Try before you buy! Spend long weekends, or even several months, living in the community you’re considering. This way, you can evaluate daily living costs, lifestyle considerations like culture and access to amenities, and see if it lives up to your expectations.
Small Money Habits, Big Impact
It’s amazing how much the little habits you carry into retirement can benefit your financial health and satisfaction. It’s a good reminder that big results don’t always require ‘big’ effort. Sometimes, being Smart About Money™ is as simple as finding one small change you can make every day until it becomes second nature, helping you head into the best years of your life more prepared and confident.