Welcome to this month’s Ask the CFP® segment.
Ask the CFP®: What should I do to prepare five years before I plan to retire?
December 2024
Welcome to this month’s Ask the CFP® segment.
Today let’s explore some key steps you should consider in the five years before you plan to retire.
First, take the time to consider your retirement goals in greater detail. Prioritize the experiences that are most important to you – do you want to travel, pursue hobbies, volunteer for a cause that inspires you, mentor others? Describe the lifestyle you envision for your post-retirement years and – this is important – have a plan for how you will fill your days.
Next, assess your overall current financial situation. Consult with your financial advisor to create a realistic retirement budget including housing, transportation, healthcare, and your leisure activities. This will help determine how much income you’ll need to maintain your desired lifestyle.
If you have been focused on work and raising your family, this can be a good time to review your savings, investments, and retirement accounts to determine if you’re on track to meet your future income needs. Based on your current financial picture, you may need to consider increasing your savings rate or adjusting your investment strategy to align with your upcoming retirement timeline.
You may also need to consider where your retirement income will come from, such as Social Security, pensions, investments, and other sources. Understanding your expected income streams can help you establish a solid foundation for your retirement.
After the age of 50, you can take advantage of catch-up contributions to your retirement accounts, especially if you’re behind on your savings goals. Your financial advisor can help you explore strategies to optimize your contributions and take full advantage of tax benefits.
Review your current asset allocation and consider making shifts in your portfolio, if needed, to achieve a diversified investment mix. Diversification is considered the key to managing risk and maximizing returns in your investment portfolio.
Healthcare costs can be a significant expense in retirement and are often overlooked. If you plan to retire prior to qualifying for Medicare, evaluating private insurance costs can prevent unwanted surprises. Don’t forget to consider your current health insurance coverage through your employer, and whether you’ll have the ability to extend that coverage using COBRA.
Even if you plan to wait until Medicare age to retire, you’ll want to explore the options for Medicare providers and supplemental insurance to align with your retirement plan.
Although no one knows exactly what their future holds, planning ahead and seeking expert guidance at least five years before you hope to retire can best prepare you to enjoy a fulfilling and financially-secure retirement.
If you have a question for a future ask the CFP® segment, please send it to tfreeman@monetagroup.com
Thanks for watching and we’ll see you next time.
© 2024 Advisory services offered by Moneta Group Investment Advisors, LLC, (“MGIA”) an investment adviser registered with the Securities and Exchange Commission (“SEC”). MGIA is a wholly owned subsidiary of Moneta Group, LLC. Registration as an investment adviser does not imply a certain level of skill or training. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified.
Trademarks and copyrights of materials referenced herein are the property of their respective owners. Index returns reflect total return, assuming reinvestment of dividends and interest. The returns do not reflect the effect of taxes and/or fees that an investor would incur. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information contained herein is subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. An index is an unmanaged portfolio of specified securities and does not reflect any initial or ongoing expenses nor can it be invested in directly. Past performance is not indicative of future returns. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise.
