The 14 Steps To Prepare for Retirement
I wrote a bunch of blog posts about retirement over the last couple of months. I’m guessing you haven’t read them all. That’s ok. This post is your roadmap to all the steps I covered. Consider this your cliff notes. A checklist of sorts. You can dive right into a subject that matters to you and ignore the rest for now.
What’s important is that you know they exist.
Determine Your Retirement Income “Personality” - at one end of the spectrum is the feeling of “safety”. At the other end of the spectrum is having options. Which end do you gravitate toward? That will determine which retirement income strategies fit you.
Longevity Risk - this is probably not the risk that’s top of mind when you consider retirement. But the success of your retirement plan depends a lot (mostly?) on how long you live. Make sure you’re thinking about what happens if you pass away early, just as much as what happens if you live a long time.
Market Risk - there are lots of other risks to your retirement plan. Even choices that feel “safe” have risk. You need to understand what kind of risk you’re comfortable with, and then design a retirement plan that mitigates the ones you don’t want to take.
Spending Surprises - even the best laid retirement plans can go awry when unexpected expenses arise. Timing of retirement, family transitions, health issues, and housing changes can all disrupt your plan. Think about having a plan that’s flexible in case something happens.
Retirement Funding Status - will your assets support your expenses over the rest of your life? That’s the “fund”amental question. At any given time you may be underfunded, overfunded, or just about right. Where you are right now dictates the next planning steps.
Turning Your Assets into Income - you can’t bring your stock portfolio or your home to the grocery store to buy groceries. So how are you going to turn your assets into money you can spend? Every strategy has it’s pros and cons. Pick the one that works for you.
An Annuity Could be a Good Strategy - the idea of “guaranteed income for life” sounds good. What are you giving up to get that? This isn’t the best strategy for everyone, but it’s worth considering if a flavor of annuity works within your plan and personality. Just don’t be “sold” without reading the fine print.
Your Social Security Strategy - you’ll probably be eligible for some benefit from Social Security - but how much, when should you take it, and how does that affect the rest of your retirement plan? It’s important to know the rules and have a plan (and know if there’s flexibility to change it).
Health Insurance and Medicare - pre-65 you need to cover your health insurance needs on your own. After 65, you need to apply for medicare. It’s a sh*tshow, and not likely to be less of one by the time you retire. A super important topic to understand since as I mentioned, healthcare is one of the big costs that can derail retirement spending.
Long-Term Care (LTC) - medicare doesn’t cover it, so what do you do when you’re too old to take care of yourself? LTC needs can burden your family, and disrupt your finances. Don’t leave your family to figure it out when it’s too late.
Retirement Housing Choices - think about where you want to live in retirement, but also what type of housing and community you want to enjoy. Don’t assume that the best choice is to “age in place”. At the same time, don’t assume that the best option is to move to a place with “lower cost of living”. Family, weather, community, healthcare, transportation, and culture can all be reasons to move in retirement.
Tax Planning in Retirement - it’s not just about minimizing your taxes today. Think about your total tax burden over the rest of your life (and that of your heirs!). Various kinds of accounts, investments within those accounts, and withdrawal strategies can make a big difference here.
Legacy Planning - your legacy isn’t just what you leave behind. Planning can make things easier for your family (with money and health) while you’re still alive. Your retirement should come first though. Your family will thank you.
Non-Financial Aspects of Retirement - money doesn’t matter if your mental and physical health suffers when you retire. Find a way to replace pre-retirement identity, structure, and relationships. Focus on staying as healthy as you can. That way you’ll be able to enjoy the retirement you worked so hard for!
There you are! It’s that easy to have a successful retirement. Of course I’m joking. It can be overwhelming when all you really want to know is “am I going to be okay?”. Let’s talk about that. Please reach out if I can help!
