Financial Planning for Every Stage of Life: Retirement
As you near retirement, it’s critical that you take a comprehensive and critical look at your financial plan for the next 20-30 years. You may not have a clear picture of what your income will look during retirement, and you can’t plan your expenses accordingly. Instead of waiting until the last minute, sit down with your financial planner now to draw up a retirement budget, discuss your investments, and look at your estate plan to ensure you have a clear plan going into retirement.
1. Prepare your budget before retirementÂ
You should sit down with your financial planner to review your projected expenses during retirement. With that in mind, plan how you can convert assets into income in a tax-efficient manner and determine the best time to start claiming Social Security.
2. Reduce your expenses
One big way to do this is by downsizing your home or moving to a new community. Look into ways to save on property taxes, utilities and other expenses. You can also review some of these tips to cut costs in small ways.
3. Maximize your investment returns
Review your portfolio’s risk tolerance to ensure you won’t suffer a huge loss upon retiring. Also consider the longevity of your nest egg and look into ways of investing it such that you won’t outlive your investments.
4. Plan for long-term care
If you aren’t interested in long-term care insurance, consider setting money aside to ensure you will eventually be able to afford such care. Also consider discussing these options with family members to see what would work best for everyone.
5. Review your estate plan
It’s critical that you make sure your assets will eventually go to your desired beneficiaries. Often times, we designate beneficiaries and forget to update our plans as our life changes. Take an especially close look at retirement accounts from employers earlier in life. These may not have been updated after you, for example, had children, got divorced, or got remarried. Also make sure you have a plan in place to ensure someone you trust can make financial and medical decisions for you if need be.
