How do know when you’ll be ready for retirement? The Center for Retirement Research at Boston College says that 20% of households are wrong in projecting when they’ll be ready to retire. The Street published an article recently, titled “8 Essential Steps to Achieve Retirement Success,” that offers a checklist to go through before you should consider yourself ready to retire.
Items to review with your financial planner:
- Determine and Test Your Retirement Budget. Do a dry run of your future retirement lifestyle for six months before your intended retirement date. This will help you get a better understanding of how you can follow your retirement budget.
- Get Rid of Debt and Downsize. If you begin your retirement with large amounts of debt, it can be trouble. Before you stop working, pay off any high interest debt to avoid having to make these payments in retirement. Consider where you’ll live in retirement and the money you can save by downsizing.
- Look through Your Portfolio. You should balance growing investments, preserving capital and generating income. This prioritization will change over time, but your portfolio should be able to handle both your current and future financial needs.
- Talk About Social Security with Your Spouse. To get the biggest payout of your Social Security benefits, you need to have a strategy in place. Your monthly benefit will differ significantly, based on the age you start receiving benefits. This will also impact the amount your surviving spouse may receive. Speak with your spouse about who will file for benefits and when. Don't be afraid to get a professional opinion, if this is overwhelming.
Review Your Estate Plan. Before you start your retirement, make sure that you have an estate plan drafted. Talk to an experienced estate planning attorney. If you life in California and have assets that exceed $150,000, we recommend a trust to avoid probate. If you already have a plan and it has been a while since you last reviewed it, have the agents/Trustees you named changed?, are your children now adults?, do you want to provide for grandchildren?, and have your assets changed? All of these items needs to be addressed especially in light of the estate tax law changes at the beginning of 2018 increasing the estate tax exemption to $11,200,000 per person.
Talk to Your Kids. If your adult children are still depending on you financially, begin a dialog to make them more independent. Even though it will be tough, it’s critical that they understand how your estate plan will affect them in the future.
Let Go of the Emotions. There can be mixed feelings about retirement. Therefore, it is very important that you and your spouse talk about how you’ll spend your free time and prepare for the changes in your routines. You should also agree on the other aspects of preparing for retirement, like determining your budget and lifestyle choices.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: The Street (April 12, 2018) “8 Essential Steps to Achieve Retirement Success”