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Five ways to strengthen your finances before retirement

Even if you're not preparing to retire for a few more years, there are still a few additional financial steps you can take to ensure that you will be able to live comfortably and successfully once you're no longer working.

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    The Social Security Administration's main campus is seen in Woodlawn, Maryland (Jan. 11, 2013).
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If retirement is only a few years down the road, hopefully you already have the right retirement savings in place. And nothing can beat a well-funded retirement account that was started early in your career.

There are a few more moves you can make before you close the door on your career for good, though. Doing these five things will ensure you have a more comfortable retirement and help stretch your nest egg a little further. 

1. Get Rid of Debt

How much debt do you have right now besides a mortgage? If you have any credit card or other loan debt, now is the time to take serious steps to getting rid of it. Once you move to a fixed income, you do not want your precious savings to fund debt repayment or to be wasted on interest payments.

Treat your debt seriously. Taking debt into retirement is like entering a marathon with a broken leg. You will exert too much energy dragging your bad leg around, and might not even cross the finish line.

First things first: calculate how much debt you have. Consider transferring your high-interest credit card debt to a promotional credit card that offers 0% APR and 0% balance transfers. This will allow you to pay more towards your debt without wasting money on interest payments. A word to the wise, however: Only transfer as much debt onto our 0% APR card as you can pay off during the promotional period. Otherwise, you'll find yourself in the same position again once the 0% APR promotional period ends and your rate rises.

2. Rethink Your Mortgage and Home

Take a look at your current home and assess it. How much do you still owe on it — and is it too much house for your retirement needs? Will this be a good home for you when you are in your 80s and have difficulty going up and down stairs?

Before you retire, consider the benefits of downsizing your home and mortgage. A smaller home will be less work to maintain and cost less to live in. Not only do smaller houses generally come with smaller mortgages, but they also cost less to heat and cool.

If your home is the right fit for your retirement needs, then focus on the mortgage. Paying off your mortgage before retirement is not a small task, but it will free your budget significantly each month.

3. Build an Emergency Fund

Just because you're retired doesn't mean you don't have a need for an emergency fund any longer. Your Social Security benefits, retirement savings, and/or pension are meant to cover your daily living expenses. But how will you pay for an emergency, such as an unexpected hospital visit or car expense? Even a $1,000 emergency can derail your budget and land you into debt if you aren't careful.

While you're still working, start saving money in a separate account for emergencies. This money should be easily accessible for small financial disasters that occur before and after retirement.

4. Boost Your Retirement Savings

If you have five to 10 years left until you retire, you still have the special opportunity to boost your retirement savings. Of course, your retirement savings will have seen the most benefit from investing in your 20s and 30s, but taking advantage of catch-up contributions are also wise.

Once you turn 50, you become eligible to make additional catch-up contributions to your retirement plan of up to $6,000 more per year. Take advantage of this opportunity to correct for lackluster retirement savings.

Remember, temporary cutbacks now can mean a more comfortable and worry-free retirement. Don't forget that contributing the full $24,000 each year after you turn 50 allows you certain tax benefits that can make the extra contributions less burdensome on your budget.

5. Draw Up a Budget and Do a Trial Run

When you first enter retirement, $1–$2 million dollars can seem like a luxurious amount. But retirement isn't the time to throw out your budget. In fact, your should stick closely to your budget to ensure you don't outlive your money.

Once you draw up a realistic retirement budget, try adhering to that budget before you actually need to. Work out your budget kinks before you retire.

While many individuals have established retirement savings funds, many have also underestimated what their financial needs will be during the last 20–30 years of their life. Applying these principles before entering retirement can ensure that your finances stay strong and healthy.

This article is from Ashley Eneriz of Wise Bread, an award-winning personal finance and credit card comparison website. This article first appeared at Wise Bread.

The Christian Science Monitor has assembled a diverse group of the best personal finance bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link in the blog description box above.

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