I get it. You’ve put countless hours into a job that doesn’t always appreciate you as much as it should. Although it did provide you with some great friends and memories through the years, you are ready to trade in the uniform for a permanent vacation. But don’t get too excited.

If you don’t properly prepare for that transition, you may only be taking a temporary vacation with no job to return back to. Don’t derail your retirement because of an emotional decision to take a break from the hard-working hours. Take some time to get a proper plan in place. You can check out our pre-retirement checklist, here.

Here are 5 rules to help you make a more prepared transition into that long awaited retirement:

Rule 1: Pay Yourself First.

Many financial experts start their preretirement pep talk with the same three words: Pay yourself first. This includes putting the maximum amount possible into your 401(k) plans and investing additional amounts in IRAs and mutual funds through deductions from your bank account or, if your employer offers it, deductions directly from your paychecks. Automatic investment plans are an easy way to stick with a retirement investing program because the money is invested before it can get spent on anything else. While automatic investing does not guarantee a profit or protect against a loss in declining markets, it does make retirement investing a priority.

Rule 2: Do Not Let Today’s Bills Sink Tomorrow’s Needs.

Supporting yourself and your family is not easy. Chances are, especially if you have children, your household expenses will grow over time. That is why it is important, especially through times of difficulty and new expenses, to keep contributing toward your retirement. When you are thinking of reducing or ceasing investing for your future to cover current expenses, stop, think and try to find another way to cover or reduce your current expenses.

Rule 3: Put Time On Your Side.

It’s simple. When you give your money more time to accumulate, the potential earnings on your investments — and the annual compounding of those earnings — can make a big difference in your final return. Consider a hypothetical investor who saved $2,000 per year for 10 years, then did not add to her nest egg for the next 10 years. She has $50,042 before taxes after 20 years, assuming she earned 6% annually in a taxdeferred account. Another hypothetical investor waited 10 years, then tried to make up for lost time by investing $3,000 annually for the next 10 years. Even though he invested more — $30,000 versus the early bird’s $20,000 — he still ends up with a smaller nest egg. Assuming he also earned 6% per year, his final account value is only $41,915. Most of the procrastinator’s nest egg — 72% — is the principal he invested. Most of the early bird’s account — 60% — is earnings.1

Retirement Rule 4: Do Not Count On Social Security.

While we keep hearing that Social Security is not going anywhere, it is still very difficult to predict what changes may be made to the program before you are ready to retire, especially if that is still several years away. According to the Social Security Administration, Social Security benefits represent 33% of the income of the elderly. By 2035, there will be more than 79 million Americans over the age of 65, compared with the approximately 49 million today.2 While the dollars and cents result of this growth is hard to determine, it is clear that investing for retirement is a prudent course of action.

Rule 5: Resist Borrowing From Your 401(k).

Loans are a popular feature of 401(k) plans. People like being able to get access to their money. But many financial advisors recommend clients consider borrowing from other sources, such as the equity in their homes, before taking 401(k) loans. Here are some reasons why: Fixed return. When you pay yourself interest as you pay back a 401(k) loan, your interest rate determines the amount you earn on that money. This may be a modest return compared with what your money could earn if you were to leave it invested in the financial markets. Payback challenge. Repaying a 401(k) loan when trying to maintain contributions may be difficult. There is a real chance that your retirement plans may suffer when you try to repay and continue to invest simultaneously. Tax penalties. Switching jobs before a 401(k) loan is repaid can bring unwanted tax consequences. You may be able to pay off or transfer your loan to your new employer’s plan, but if neither option is available to you, your loan balance will be considered a distribution from your plan. The distribution is taxable as ordinary income and may be subject to a premature distribution penalty tax of 10% unless you meet the age exemption provided for in the Internal Revenue Code.

Make sure to avoid a decision that can lead to looking for employment at a late stage in life. Take some time to set up a plan for maximizing your retirement. By doing so, you can have the peace-of-mind knowing that you have the time to enjoy a relaxing and fulfilled life after work.

For more resources about retirement planning, take a look at previous blog posts