10 Steps to a Prepared Retirement

Retirement can be an exciting stage of life to think about but can also be stressful.  Be sure to consider all the pieces that go into retirement planning before you make a life changing decision.

1. CAN YOU AFFORD TO RETIRE NOW?
The first step into retirement preparation is to verify when you can afford to retire. You need to be able to maintain lifetime income into the late stages of your life, usually age 94. It is productive to take an accounting of the “needs” expenses you must meet in retirement, and then add the “wants” expenses you’d like to have or do in retirement. Don’t forget to factor in increased healthcare costs as you age.

2. GUARANTEED INCOME STREAMS
Gather specific information on your Social Security benefits for both you and your spouse. For more accurate Social Security benefit estimates, open an online account on their website ssa.gov or call 800-772-1213. You will also want to gather previous and present pension benefits you or your spouse may be eligible for.

3. CONSOLIDATION
Combine, through tax free rollovers, old 401(k) and IRA balances, so a total of retirement savings along with other investments and savings can be determined. This list will one day be the source of your income or supplemental income in your retirement years.

4. FINANCIAL ADVISOR
With the information from the steps above, you can seek out a financial advisor who will be able to guide you through the retirement process. They will be able to build future income projections and models for you. This will be data that can help you make educated decisions. Seeking trusted advisors takes work and you may have to interview several before you find one that you think you can trust. Completing these steps will take time and effort on your part.

5. END OF LIFE PLANNING
Once your future retirement income projections are completed, it is not too early to plan for long term care costs in your later years. Where will those expenses be paid from? How will that affect a remaining spouse or beneficiaries? Make sure you update your will and trust with your attorney and that your beneficiaries are named correctly on your retirement accounts.

6. TAX PLANNING
Tax planning before and during full retirement is important, especially after age 72 when IRA distribution requirements begin. A tax advisor is key. Your retirement income projections should be able to approximate your tax liabilities in retirement. Retirees are often not in a lower tax bracket despite popular beliefs.

7. DEBT
Debt management or reduction. Reducing debts prior to retirement will boost your cash flow position in retirement allowing more income to be used for living expenses. Manage and reduce debts prior to or shortly after retiring.

8. EMPLOYMENT PHASE DOWN
Will you work part time for a few years or retire fully? Your Employer may ask you to work part time and this may keep you active and bring in income. This can also allow you to build more retirement assets in your Employer Sponsored Retirement plans depending on eligibility with your employer.

9. HEALTH INSURANCE
Be clear where your health insurance benefits for you and your spouse will be based. Enroll in Medicare when eligible. Seek counsel from your Human Resources department or from a qualified health insurance agent to verify that you are insured in retirement. Do not retire until you are clear on your health coverage.

10. RETIRING WELL
Envision your years ahead with your family. Think about your social circles, activities, and hobbies so you stay connected to a community of friends. Your retirement may last for 30 years or more so make plans to enjoy yours.