Do you know what 7 steps you need to take prior to retirement in order to assure yourself of a secure retirement?
Saving for retirement can be so much easier to implement than withdrawing money while in retirement. You will ask yourself once you start to draw down your retirement money, “Do I have enough money to sustain my retirement and how much can I safely take out each year?” “Am I aware of the 7 must dos as I approach retirement?
Whether you are saving for retirement or just started withdrawing money in your retirement, the following guidelines should offer you insightful recommendations.
Take stock in yourself
One of your greatest attributes is your ability to earn money while employed. This can include continuing to educate yourself and staying current on developments within your field of work.
The longer you can stay employed, the more money you can contribute to your retirement plan.
If for whatever reason, you choose to leave your career, think about a second career a so-called “later in life” job that is more gratifying but perhaps not as well paying. Working at a part-time job can reduce your need to withdraw money from your retirement plan, allowing it to last longer.
Make plans for your Social Security strategy
The longer you stay employed, the longer you can delay Social Security and increase your monthly benefit. The difference in benefits can be eye-opening if you take the time to review your options.
At Retirement Solutions, we use a sophisticated computer program to show our clients the difference delaying Social Security can make to their overall financial health. It can add up to hundreds of thousands of dollars over the course of your life.
Maintain a financial safety cushion
It is critical to have an adequate emergency or “rainy day” fund for those times when unexpected bills present themselves. You should have at least a one-year supply of living expenses in an easy-to-get-to form of cash.
In addition to readily available cash, stay on top of the important insurance coverages such as health, long-term care, property and casualty and perhaps life insurance if the need is there.
Assess your current investments
As you approach your retirement, take a hard look at your investments. Would you be able to take out 4% of your investments in order to fund your retirement? Add in Social Security and any company pension plan if you have one.
Retirement Solutions has the expertise to assist you with this task. For decades we have been helping women assess their retirement readiness.
Sprint to the finish line
If you are in your 50s and 60s, you most likely have the ability to stash as much money into a retirement account(s) as you can. Now is the time to go all out to fund your retirement plan.
You can contribute to tax-sheltered plans such as IRAs and 401(k)s and take advantage of the “catch-up” provisions allowed by the IRS.
You can also supplement your tax-sheltered retirement plans with non-retirement accounts and use tax-efficient investment options. Retirement Solutions can assist with this task.
Begin to reduce your investment risk
As we get older, we have less time to make up for any investment losses that may occur. This does not mean that you should put all of your money into cash and CDs or under your mattress. It does mean to diversify while keeping in mind that you need to plan for a 30-40 year retirement period.
At Retirement Solutions, we use a 3 Bucket Methodology to diversify a woman’s retirement money. Each bucket is designed to hold money that will be needed during a certain period in a woman’s retirement. Bucket #1 holds the most conservative assets for immediate income needs.
Bucket #2 holds slightly more aggressive funds for needs later in a woman’s life and finally, Bucket #3 holds the more aggressive assets in which to provide the growth of income that every woman will need while retired.
When and how to withdraw your money
This may be the most challenging of the retirement planning must dos. Therefore it is advisable to consult with your tax consultant and a qualified retirement specialist to determine which accounts should be taken from first. Once you turn age 73 (or possibly age 75 depending upon when you were born) you must start taking money from your retirement accounts. These distributions are known as Required Minimum Distributions.
Depending upon your situation, it might make economic sense to start taking money from your retirement plans before you are forced to do so. This is where the assistance from a qualified tax professional and retirement specialist can be of enormous help.
Retirement Solutions has the experience to assist you with these very critical decisions. Let us know if you would like to discuss your situation with us. There will be no obligation nor fee for the consultation. You talk, we listen. Click the “Schedule a Consultation” button in the upper right corner of this page should you wish to discuss your situation.