Ready to Retire: The Ultimate Pre-Retirement Checklist with The Retirement Manifesto

Notes for BiggerPockets Money Podcast 125
Guest: Fritz Gilbert
Audio time: 1 hr 29 min
Read time: 3 min

Fritz Gilbert, of Retirement Manifesto, has created a pre-retirement checklist to guide people in making a smooth transition into retirement. Many people (especially my age) may think of retirement as a faraway concept, something that’ll eventually happen. They may not realize that there’s actually a lot of active planning involved. In this podcast, Fritz explains his personal experience with the 5-year checklist and how it may be helpful for others.

The Grind

This is the time from when you start working, up until you are five years out from retirement. Fritz saved 15-50% of his income during the grind (less so in his early years, higher savings rate as he got older). During this time, you should:

• Cut back expenses
• Work on career development (raises, promotions)
• Grow your income
• Invest in retirement accounts, real estate, etc

Checkpoint: 5 Years Out

• Fritz’s experience
  • Did Roth conversions to get pre-tax money out of 401k
  • Maxed out 401k for the most part. If not maxing out 401k, he has money in mutual funds (dollar cost average)
  • Invested a small percentage of fun money in trading options
• Crack the numbers: retirement calculators, net worth, asset allocation, rebalancing strategy
• Think about retirement lifestyle at a high level (if you want to travel in retirement, you might need more money than a minimalist)

Checkpoint: 3 Years Out

• Get specific about where you will draw money from
• Eliminate all debt (including mortgage)
  • There is a real emotional benefit to entering retirement debt-free
  • Some may disagree with this point. There’s no wrong answer here, but you need to think it through for yourself
  • Frtiz’s experience: Had a house in the city and a second home (cabin). Nearing retirement, he decided to sell the city home to pay off the mortgage on cabin
• Consider hiring professional help (CFP)
• Long term care: self-insure or third party service?

Checkpoint: 2 Years Out

• Less about numbers, more psychological
• What are you going to do in retirement?
• Try a mini retirement (pretend you’re retired or take the time to imagine what your life would look like if you were retired)
• Start doing the activities you think you’d like to do in retirement (starting a blog, dog rescue, etc)
  • You don’t have to wait until you’re retired to get started

Checkpoint: 1 Year Out

• Make sure your “wheel of life” spokes are all the same length
  • Meaning all aspects of your life are balanced (health, relationships, growth)
• Find more meaningful activities than traveling (perhaps in helping others)
• Set up a system to move from accumulation to withdrawal (he uses bucket strategy)
• The difference between a successful retirement vs not is how much time you spend thinking about it
• Really spend time thinking how you will spend your retirement days. Very likely it’s what you’re doing on the weekends now
• 1 more year syndrome: negotiating to yourself “1 more year” at your job before you’re ready to retire
  • Caused by assumptions made when forecasting returns
  • Okay to take 1 more year for safe measures, but don’t procrastinate on your retirement because you’re afraid to take the leap

Checkpoint: 6 Months Out

• Transfer work computer information to personal computer (passwords, documents, etc)
• Plan your first 6 months of retirement
  • This way you hit the ground running and your first 6 months are busy
• Make your last big expenses while you’re working (in case you mess up and overspend, you can work for a few more months)
• Give notice to your workplace of your departure
  • Make sure you notify them early if your position requires more time to fill

The Starting Line: Final Thoughts

• 60% of people don’t retire on their own terms, they are forced into retirement
  • As a result, they have no time to prepare and it’s not an easy transition
  • Take control of your own retirement by planning in advance
• Relationships change in retirement, have a conversation about it
• It’s easy to get caught up in counting down the days until retirement / FIRE and get lost in thoughts about the future
  • Enjoy and realize the journey you are on. Your independence day will come, so enjoy the process now in getting there
• Retirement is not a finish line, but the start. The start of your life, lived the way you want