3 Items for Your Preretirement To-Do List

Trying to decide when to retire? It’s a question that every worker faces at some point. In some cases your decision is made for you, because of health issues or employer restructurings. In an ideal world, however, you would get to retire at the time that’s right for you. There’s no universal correct answer on when that time is. It should be based on your unique needs, goals and objectives.

It may be helpful to think about what you need to complete before you retire. For example, you may want to save a certain amount of assets. Or you may want to reach full retirement age (FRA) for Social Security. Maybe you have stock options or other employer benefits that need to vest before you leave the working world.

There are also planning items you can use to minimize risk and improve your odds for success. Below are three such items. If you’re thinking about retirement but haven’t completed these items, now may be the time to do so. A financial professional can help you complete your planning so you can enter retirement with confidence.

Create your retirement budget.

Are you one of the 60 percent of Americans who don’t use a budget?1 If so, retirement is the perfect time to make a change. A budget is one of the most effective financial tools available because it helps you make informed purchasing decisions and stay on track to reach your goals.

A budget is especially important as you enter retirement. One of the biggest risks in the early years of retirement is that you spend too much and deplete your assets too quickly. That could lead to you not having enough money in the later years of retirement. A budget can minimize this risk.

You can’t predict every expense you’ll face in retirement, but you can make estimates based on your current spending and your desired lifestyle. Also, be sure to include inflation in your budget. Your cost of living is likely to increase over time.

Map out your retirement income.

Where will your income come from in retirement? If you’re like most retirees, you’ll receive Social Security benefits. You also may receive a pension or some other type of income. And you’ll likely need to take distributions from your 401(k) plan, IRA or other retirement accounts.

Take some time to project your income. The Social Security Administration can provide you with benefit estimates, and your company’s human resources department should be able to provide estimated pension payments. A financial professional can help you determine a reasonable distribution amount to take from your savings each year. You also may want to consider an annuity, which can generate guaranteed lifetime income.

Minimize your risk exposure.

Life can be unpredictable, and it’s possible that your retirement may not go according to plan. For instance, you or your spouse may develop a condition such as Alzheimer’s that requires long-term care. The financial markets could suffer a downturn that limits your ability to draw income. Your health care costs could be greater than expected.

A financial professional can help you develop strategies to minimize your exposure to risk. For example, you may want to consider long-term care insurance. An annuity could be a helpful tool to guarantee your income and minimize downside risk. These steps and more could help you avoid dangerous threats that could sink your retirement.

Ready to implement your retirement strategy? Let’s talk about it. Contact us at Protecting Your Retirement. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.

 

1https://money.cnn.com/2016/10/24/pf/financial-mistake-budget/index.html

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