Do You Have A Plan For Your Golden Years?

Editors Note: We can’t overemphasize the importance of planning for retirement early. So we are breathing new life into this article about retirement planning to help you on your journey.

It’s Smart To Start Planning Early

Retirement … you spend years dreaming about it (and maybe even saving for it). Still, many worry about having enough money to retire comfortably and independently. Below is a checklist to get you started planning for the big day.

Items to Consider Now

  • Establish retirement goals – Determine what you want to do after you retire and whether your existing assets will support that lifestyle. Questions you might want to start asking your self (sooner rather than later) include:
    • How long do you want to work?
    • When do you plan to retire?
    • How long do you expect to live after you retire?
    • How much do you need to have saved on the day you retire?
    • Do you plan to continue the same lifestyle you have now? Or, will you cut back and live a simpler life?
  • Increase your 401(k) contributions – Take full advantage of your employer’s defined contribution plan by saving the maximum allowable. Always remember to pay yourself first. If you have reached age 50, review your contributions to make sure that you are taking full advantage of the additional “catch-up” contributions that you are allowed to make.
  • Pay off your mortgage – Paying off the mortgage can be a strong planning tool in saving for the future, whether you are saving for retirement or to help children pay for college. In addition, the absence of a mortgage during retirement means drawing less from your retirement accounts, allowing them to continue growing.

Listen to episode 145, “Building Your Retirement Paycheck,” on Rea’s award-winning weekly podcast, unsuitable on Rea Radio.

10 Years Out

  • Review your retirement goals – Have your plans for retirement changed? Review and update your annual budget for your retirement years.
  • Think about where you will live – Maybe downsizing or moving to a community with a lower cost of living can help you free up some assets.

Five Years Out

  • Cut your risks – Take a look at your portfolio. This may be the time to be a little more conservative in your investments.
  • Find out what income you can expect – Review your annual Social Security benefit statement, savings and pension. Remember, the cost of living will continue to increase, so plan accordingly.
  • Think about health-care and long-term care expenses – Medical costs are always increasing, so make sure you have enough coverage in addition to the Medicare benefits.

One Year Out

  • Put the finishing touches on your plan. Decide how you are going to handle your 401(k), IRA and other accounts. Update your retirement budget.

Other Important Items to Remember

  • Apply for Social Security three months before you want your first check. You are not eligible for Social Security benefits until age 62 (and even then, remember that the longer you wait to begin collecting these benefits – up to age 70 – the higher your monthly benefit will be).
  • Sign up for Medicare three months before your 65th birthday.
  • Many of the decisions you will make carry significant tax implications. Be sure to seek the help of a professional tax advisor and certified financial planner to help you reach your desired goals while making sure you are not exposing yourself to unnecessary tax consequences.

Contact Rea & Associates today to speak with a team member who can help you successfully plan for the retirement you deserve.

By Cindy Kula, CPA/PFS, CFP (Cleveland office)

Looking for more retirement and tax planning strategies? Check out these resources:

Podcast | Talkin’ ‘Bout My Generational Tax Planning Strategies

Five Financial Considerations For Every Age Group

What Will Your Legacy Look Like?