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Retirement's just around the corner. Are you sure you're ready?

So you have raised your children, entered your peak earnings years and finally feel that you are not living paycheck to paycheck. Now is the time to begin enjoying the fruits of your many years of labor—and to get a grasp of the concept of an imminent retirement.

But are you ready? Do you know how to measure your preparedness for the final 10 to 15 years of your working life? There are four major issues that 40- and 50-somethings should ensure are addressed when preparing for retirement—or what we call financial independence: mitigating risk, planning an estate and developing both an investment strategy and an overall financial plan.


Couple finances
Pascal Broze | Onoky | Getty Images

Mitigating risk

You might think that since the kids are out of the house and you have fewer people dependent on your income, you might not need to think about insurance anymore. However, your need for three types of insurance should be very carefully considered.

Umbrella liability insurance is the easiest and cheapest way to mitigate the risks of unwelcome yet possible liability exposure—a lawsuit from a car accident, for example. Calling your property and casualty carrier to add this coverage is essential to protect your growing nest egg.

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Disability insurance and long-term care insurance—which many regard as too expensive—are both extremely important to consider. Our experience is that, while not frequently used, these types of insurance protect your financial world if you're adversely affected by bad luck or genes.

As you approach your 50s and 60s, the odds of contracting illnesses and other health problems rapidly increase; you don't want to be caught wishing you had spent the extra annual premium dollars for this protection.

Estate planning

Our clients in their 40s and 50s are entering that time in life when they may have to deal with their aging parents' estates. This is sometimes their first experience with how important good estate planning is to an overall financial strategy.

While the issue of guardianship for your children—a big stumbling block for many people when it comes to estate planning—is most likely past, the need for good financial and health-care powers of attorney, with multiple decision makers, is key.

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In addition, assessing your plan for the disposition of your assets (to whom your money and "stuff" go and in what form) ensures that you control what happens in the case of your early demise. We always tell our clients that if you don't have the right documents, the state has an estate plan for you—you just may not agree with it. Why not be proactive instead?

Investing strategies

The financial topics on which most people focus are investments and retirement savings. These are certainly important things to do well in your 40s and 50s, usually your peak earning years.

A good investment strategy should include a diversified portfolio of multiple, non-correlating asset classes, in which you locate tax-inefficient investments in the proper tax-sheltered accounts, and in which you ensure that the investment strategy includes all of the investment accounts that you have built.

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Many people develop a strategy for just their 401(k) plan or just their taxable or joint account, but the strategy should incorporate all of your assets so that you maximize their work on your behalf.

Since you may be past some of life's bigger expenses, such as raising children or sending them to college, now is the time to maximize your savings rates to capture as much of that discretionary income as possible.

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A financial plan

Finally, most people I come across who are in their 40s and 50s do not, in fact, have a financial plan. I'm not talking about inch-thick three-ring binders literally labeled "Financial Plan," but rather the ability to answer a question about how much you need to save—and by when.

That is the question that you do not want to be asking your financial advisor in your 60s, when it may be too late.

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Hiring a financial advisor—one who has a fiduciary duty to put your interests above his/her own—is a great step on the way to being prepared for retirement. A good advisor does not answer such questions for you but gives you tools to make better financial decisions when the time is right.

Things like assessing your need for additional disability insurance or evaluating your estate-planning documents are issues a financial advisor should be able to address with you. As parts of your financial plan, they are just as important as your investment strategy. Without these, your entire plan can fall apart under certain circumstances. Your job is to ensure that your imminent retirement is not knocked off schedule because of an unplanned event.

Good luck

Now that you have entered the time of life when you have a little more control of how you spend—or save—your money, take the time to spend your hard-earned cash on some things that can really make a difference: proper insurance, good estate documents and a low-cost but well-thought-out investment strategy, all coordinated by you and a trusted financial advisor.

Financial independence can come earlier than you may think possible if you make the right decisions to protect your financial world. And should that imminent retirement sneak up on you earlier than you'd planned, you won't be caught unprepared.

—By Jon Yankee, special to CNBC.com. Yankee is chief financial officer and co-founder of FJY Financial.