10 Years and Counting – Points to Consider as You Approach Retirement

If you’re a decade or so away from retirement, you’ve probably spent at least some time thinking about this significant life change.

  • How will you manage the transition?
  • Will you travel, take up a new sport or hobby?
  • Will you spend more time with friends and family?
  • Will you continue to work in some capacity?
  • Will changes in your income sources affect your standard of living?

Thinking about all of the issues surrounding the transition, the process can seem daunting.

However, I’ve got a few points I would like you to consider while you still have years ahead. My hope is that this guide will help you focus your efforts and minimize the anxiety that often accompanies your shift into retirement.

Reassess Your Living Expenses

As you progress through retirement, you need to reassess the cost of your expenses.

For example, commuting and other work-related costs may decrease, while other budget items, such as healthcare costs, may rise.

To handle this, you will need to estimate your monthly expense budget for the first few years after you stop working. Continue to reassess this budget as your vision of retirement becomes a reality. Doing this will greatly help you to anticipate your budget while in retirement.

Consider All Your Income Sources

As you transition into retirement, part of planning your budget is determining where your funds will be coming from. Here are some steps that you may need to consider when determining your income sources:

  1. Determine how much you stand to receive in social security. It is essential since the amount you receive will depend on your earnings history and other unique factors.
  2. Review the accounts you’ve earmarked for retirement income, including any employer benefits. Start with your employer-sponsored plan, and then consider any IRAs and traditional investment accounts you may own.
  3. Estimate how much your employer could provide on a monthly basis by contacting your employer’s plan administrator for an estimate of that monthly benefit amount, especially if your employer provides a traditional pension plan.
  4. Consider other ways to make money when you retire. For example, some retirees turn their hobbies into an income source. Others include selling gently used goods and pet sitting to generate extra cash.

Pay Off Debt, Power Up Your Savings

Once you’ve figured out what your possible expenses and income look like, the next step is to draw up a plan for paying off debts and power up your retirement savings before retirement.

You may ask, “Why pay off debts and power up your savings?” Paying off debts gives you the opportunity to modify your monthly expenses in retirement, and the ability to scale back your spending if necessary.

On the other hand, powering your savings helps you take advantage of catch-up contributions such as IRAs and 401(k) since you’ll likely earn the highest career salary before retirement.

Manage Taxes

As you think about when to tap your various resources for retirement income, it is important to consider the tax impact of your strategy.

For example, you may want to withdraw money from your taxable accounts to allow your employer-sponsored plans and to give IRAs more time to benefit from the task-deferred ground.

However, remember that you’re only required to take a minimum distribution from tax-deferred accounts once you reach age 72, whether or not you need the money.

Of course a tax-based decision may be daunting, nevertheless, I recommend speaking to qualified tax and financial professionals to provide valuable insight and guidance for you.

Account for Health Care

Your health care should be given special attention as you plan the transition to retirement. This is because as you age, the portion of your budget consumed by health-related costs (including both medical and dental) will likely increase.

However, you can account for this by exploring Original Medicare Parts A and B, a healthcare insurance that covers inpatient and outpatient care respectively, while you will have deductibles, copayments, and coinsurance to cover yourself.

If you aren’t ready for these terms and conditions, you can purchase a supplemental Medigap insurance policy (which pays many of your out-of-pocket plans).

Another option to explore is long-term health insurance, especially in situations where your spouse or a family member would need home care, nursing home care, or other long-term assistance which Medicare will not cover.

It could also be that you have substantial assets you’d like to protect or want to leave assets to heirs, which is why people buy long-term care insurance.

Ease the Transition

Thinking about your transition to retirement can be overwhelming, but breaking the bigger picture into smaller categories and using the years ahead to plan accordingly may help make the process a little easier.

Please connect with us and let us help you plan for your dream retirement. We would be delighted to go on the journey with you.

Confidence Wealth Managementis a sophisticated Private Wealth Management firm that specializes in what we consider to be next-level, advanced strategies and solutions to protect and prudently grow your wealth.

BLOG

YOUTUBE

Interesting Articles to Read

© 2023 Confidence Wealth Management LLC. All rights reserved.

Investment Advisory Services offered through Confidence Wealth Management LLC, an SEC registered investment adviser. Confidence Wealth Management LLC (CWM) and Confidence Wealth & Insurance Solutions LLC (CWIS) are two separate affiliated companies. All investment advisory services are provided by CWM. All insurance products and services are provided by CWIS. CWIS does not provide any investment advisory services. CWM does not sell any insurance products. For complete information regarding Confidence Wealth Management’s services and fees, please review our Form ADV Part 2A Disclosure Brochure, which can be found at adviserinfo.sec.gov or requested by calling us at (310) 824-1000. Information provided herein reflect Confidence Wealth Management’s views as of the creation date. Such views are subject to change without notice. Information provided herein is for informational purposes only and should not be considered investment advice or a recommendation to buy or sell any securities. No investment decision should be made based solely on any information provided herein. Confidence Wealth Management has not taken into account the investment objectives, financial situation or particular needs of any individual investor. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. Asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. This is designed to provide general information on the subjects covered. Pursuant to its circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that the information given does not give legal or tax advice. Should you have any tax or legal questions, you are encouraged to consult your tax advisor or attorney for any tax or legal matters. Not affiliated with the U.S. Government or any governmental agency.
1,2 Insider Intelligence  3 PWC 2021 Family Business Survey: US Findings

Terms of Use  |  Privacy Policy

Confidence Wealth Management LLC (CWM) is an SEC registered investment adviser. Confidence Wealth & Insurance Solutions LLC (CWIS) is licensed under the NV Department of Insurance, license no. 3647322. CWM and CWIS are two separate affiliated companies. All investment advisory services are provided by CWM and all insurance products and services are provided by CWIS. CWIS does not provide any investment advisory services and CWM does not provide insurance services. CWM and CWIS have no affiliation with government, state, or local agencies. Consult with an attorney or CPA for usage of tax or legal concepts. This material may contain information that are close approximation to the totality of information available to us and not necessarily specific within regards to one situation or another. Some opinions and statements are informational. They are not investment advice as they may not be complete in terms of all details needed to affect an action you wish to undertake, investment strategy or plan. Pursuant to IRS Circular 230, the material is not intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. No estimates used are a promise of return. Also, many opinions are summaries and may not reflect all pertinent facts relevant to you. Any information given is to be considered general, and nothing said herein should be used as a basis for investment decision unless you consult with your Confidence Wealth advisor that can understand your unique situation and give you a customized solution with a complete disclosure. Past performance does not indicate future results. As you know, no one can predict the future. Thus, any forecast in this material is intended strictly as a possible future outlook and not a statement of fact as there could be any scenarios that are not in your favor when making a decision. You must examine all adverse and negative implications on any forecast when made. All information is based on the date of the material and may not be valid, may change, and/or may not be true any longer as time passes. Also, the Form ADV Part 2A for CWM contains detailed disclosures regarding our services and fees, along with applicable conflicts and how we address such conflicts. A copy of our Form ADV can be obtained by calling (310) 824-1000.