For Mark Roberts’ Use: As you race toward the retirement finish line, escaping the office might be all you can think about! But it’s better to create a solid plan before entering into a new phase of your life. This will prevent you from feeling disappointed in your retirement, or making major financial mistakes. As you get ready to retire, remember to ask yourself these four questions.
What is your real tolerance for risk? Throughout your working years, you might have invested in somewhat riskier fund options. You felt the potential for financial growth was worth the risk, because you could always make up for any losses later. But now, as you approach retirement, it might not be a good idea to continue risking the principle in your retirement account. In most cases, it is better to switch to a lower-risk investment philosophy that protects your savings.
What is your withdrawal strategy? Many people retire, understanding that they will take regular withdrawals from their retirement funds to cover the cost of living, and yet they don’t really have a plan for these withdrawals. It’s important to pay attention to the tax status of your various accounts, as well as your tax bracket, so that you can take withdrawals in such a way that minimizes your income tax burden each year. Also, since some retirees experience a gradual increase in their cost of living due to medical expenses and nursing care, you might consider establishing a plan to take increasing withdrawals each year rather than a flat amount.
What are you going to do all day? This might seem like a silly question. After years of a busy career and scheduling hassles, you imagine that you will be relieved to retire from all of that! And yet, the happiest retirees are those who have a plan for their retirement years. You can always cut back on activities if you overschedule yourself, but under-scheduling can lead to a life of boredom. Believe it or not, you could find yourself restless and depressed if you retire without a solid plan for your daily activities.
Have you established an estate plan? We all hope that we won’t outlive our savings. But on the other hand, there is a chance that your savings will outlive you! What will become of your assets in the event that you pass away earlier than you had expected? You should create an estate plan to decide how your assets are distributed after your death.
For more help with retirement planning issues, contact our office to schedule an appointment.