Approaching Retirement? Zero In on Your Strategy!
Are You Just a Decade Away from Retirement? Here’s Your Playbook
As you approach the decade leading up to your well-earned retirement, it’s natural to feel a mix of anticipation and apprehension. With the right planning, those feelings of uncertainty can be transformed into confidence and excitement. The journey toward this significant milestone may seem challenging, but there's no need to worry if you begin preparing now. Here are some key focal points to streamline your path.
Rethink Your Cost of Living
One exercise you'll likely undertake multiple times as you near retirement is recalibrating your living expenses. While your daily commute and work attire costs may dwindle, expenses like healthcare and travel might creep up. Craft a prospective budget for your early retirement years and regularly update it as your retirement vision takes shape.
Diversify Your Income Streams
Evaluate all your prospective sources of income. You probably have a mix of employer-sponsored retirement plans, IRAs, and perhaps even rental income. Calculate how much these could collectively contribute to your monthly income. If you're married, don’t overlook your spouse’s financial assets. Contact your pension plan administrator, if applicable, for a monthly benefit estimate.
Create a Side Hustle or Passion Project
Retirement doesn't necessarily mean you'll stop working altogether. Many retirees discover they can consult, monetize a hobby, or work part-time. This additional income can offer a financial cushion, allowing your investments more time to grow.
Don't Overlook Social Security
A key part of your retirement income will come from Social Security. Get an accurate estimate of your benefits by visiting the Social Security Administration's website or signing up for an online account to view a detailed earnings record and benefit estimates.
Strategize for Taxes
Taxes don’t disappear when you retire. In fact, how you draw down your retirement accounts can significantly impact your tax liability. Should you tap into taxable or tax-deferred accounts first? Will part-time work affect your Social Security benefits? Consult a qualified tax professional for tailored advice.
Accelerate Debt Payments and Boost Savings
Retiring with debts hanging over your head can significantly impede your financial flexibility. Develop a rigorous plan to eliminate debt, including mortgage payments if possible. Concurrently, accelerate your retirement savings, especially when you’re at your peak earning potential. And if you're 50 or older, don't forget about catch-up contributions to supercharge your retirement funds.
Factor In Healthcare Costs
Healthcare often becomes a significant budget item in retirement. Although Medicare provides some coverage, you'll still face deductibles, co-pays, and other out-of-pocket expenses. Consider purchasing supplemental insurance to mitigate these costs. Additionally, think about a long-term care insurance policy, especially as Medicare does not cover this kind of care.
Entering retirement can indeed be overwhelming, but breaking down the big picture into these manageable steps can make your journey much smoother. The key is to start planning now so you can enter this new chapter of life with confidence and financial security.
Krista McBeath is an Investment Advisor, Chartered Financial Consultant, a Licensed Insurance Advisor, a Fiduciary, and an experienced tax advisor who specializes in financial planning, investments, and insurance.
The McBeath Financial Group team utilizes advanced tools for in-depth calculations that analyze tax and retirement scenarios to help their clients avoid a future tax time-bomb. Whether this means enjoying more of your hard-earned money in retirement or passing along assets to loved ones with less tax burden, planning makes the difference.
Krista's Amazon best-selling book, The Generational Wealth System outlines a holistic approach to preserving lifestyle, wealth and legacy.
