Retirement looms for an ever-increasing number of baby boomers (I suspect a lot of us qualify).

Many of us may shy from what we perceive as an uncomfortable – but postponable – subject – but we shouldn’t.

Rather, we should plan carefully for what is inevitable. Unless we “die in harness,” which God forbid, we have a long life to experience and enjoy after our working lives are over.

And we shouldn’t put this planning off until after the fact – as all too many of us are inclined to do.

Here are some steps we suggest taking the year before you retire – if you haven’t done so before.

Create An Income Plan

Do you have a clear picture of where your income will come from after you retire?

How much income can you expect from:

• Social Security
• Your individual retirement accounts (IRAs)
• Any employer-sponsored retirement plans you participate in, whether defined-benefit (e.g., pension plans) or defined-contribution (e.g., 401(k)s, 403(b)s, 457(b)s, etc.)
• Other sources, such as income from real estate investments or new business ventures, inheritances, etc.

It’s important to know where your income will come from, and how much that income will be in aggregate.

Develop a Plan for Your Post-Retirement Healthcare Needs

Age, if we’re lucky, brings us greater wisdom. Unfortunately, it also brings us increased expenditures on healthcare – even if we eat healthily, exercise, and do everything we can to optimize our health.

When planning for retirement, you need to consider:

• Health insurance. While you have paid for Medicare coverage throughout your working life, automatic coverage is limited to Plans A (inpatient care at hospitals, skilled nursing facilities, nursing homes, and hospices, and some home health services) and B (medically necessary services, including ambulances, preventive services including most visits to physicians, limited prescription drugs, and some medical equipment such as those which provide oxygen). You can also opt for Parts C and D coverage (private company offered Medicare Advantage plans, which cover Parts A and B and often offer additional services and/or Part D, which provides more coverage for prescription drugs). So, you need to determine which Medicare plan you need, as well as allow for costs such as premiums, co-pays, etc.
• Any hereditary propensity toward areas of concern – are you genetically predisposed to develop any serious conditions? If so, that, too, needs to be considered.
• Some businesses offer lifetime health coverage for partners or high-level employees – does yours? Is there a premium or other charge to you after retirement?

And once you’ve allowed for all these factors, you need to incorporate those fixed and potential costs into your retirement planning.

Cut Down on the Pieces of Your Financial Puzzle

Often, we accumulate many pieces which make up our financial picture – but, when planning for retirement, consider:

• How many retirement accounts do you have? What type(s) are they – IRAs, 401(k)s or other employer-sponsored plans? Maybe you have a mixture of both. Do you need all of them individually? Maybe the answer is “yes,” but it’s important to see whether they can be streamlined. Multiple IRAs can be combined into one, even if you want to keep your employer-sponsored plan assets where they are.
• How many in-force life insurance policies do you have? Do you need them all? If your children are grown and self-supporting, and your spouse is well-provided for via other estate planning vehicles, you may not need any of them.
• Do you have disability insurance, other than that which may be provided by your employer? The latter will likely cease to be effective once you retire; and when you’re no longer receiving earned income, do you really need disability insurance?
• You may need or want to have several non-qualified investment accounts (separate accounts for yourself and your spouse, a joint investment account, etc.). But can you consolidate at all?

Create a Post-Retirement Spending Plan

Taking into account the post-retirement income you can count on, determine:

• Your fixed expenses (e.g., medical insurance, home maintenance, utilities, landscaping, vehicle purchases and maintenance, etc.).
• If you will have more than you need for these, congratulations! What, then, do you want to do with your extra cash?

Additional Pre-Retirement Considerations

Other aspects of retirement planning include:

• Your asset allocations. Whether you have one investment account or 20, and whether you have all your assets in qualified retirement accounts or not, the best asset allocation for you before you retire may not be optimal afterward.
• Your home – do you want to stay in the home you have now, or do you want to change. Whether that change is downsizing, upscaling, or moving to an entirely different place, it’s a choice you need to make, and once your family needs to be in the loop about – though the final decision is and should be yours (and your spouse’s, if you’re married).
• Any travel plans you have. Many people put off travel they would dearly love to do until they’ve retired. That’s not a right-or-wrong choice, it’s a preference. But if you do want to travel, that represents additional projected expenditures which need to be factored into your planning.

This touches on the final, vital consideration:

What’s Next?

Retirement, of course, represents, if not necessarily the end of your working life, at least the end of a significant portion of it.

But, as T.S. Eliot wrote,

In my end is my beginning.

You can choose to start a new business or buy an existing one that’s been your dream – like a winery, if you’re an oenophile.

You can choose to stay quietly at home, enjoying time with family and friends, read the books you’ve never had the time to, attend musical concerts, theatre, more films – in short, you can do anything your income allows and your inclination sends you toward.

But it’s vital to know what those options are – and which ones you want to pursue.

Because one thing about retirement – it takes away the structure your working life gave you.

Structure is important – and even more so is having purpose in your life.

Never let yourself waste away the rest of your life drifting – unless that’s your deliberate and desired choice.

But make that choice – don’t let idleness – or anything else – choose you.

Your virtual CFO can help you plan for every aspect of your retirement. This planning, in turn, needs to focus on what you want out of your retirement – your goals, your needs, your desires.

At Rigby Financial Group, we will custom-tailor a retirement plan to meet your needs. We never take a cookie-cutter approach.

Please click here to email us directly – we are here to help.

Until next time –

Peace,

Eric