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Five Important Financial Considerations as You Approach Retirement


You’re almost there! Your well-earned retirement is just a few years away. It’s exciting, for sure. This is an important time for you to prepare and plan for the realities of your post-retirement life. Here are some key issues worth looking at.

Healthcare expenses

Research shows us that couples who retire at the age of 65 in the United States will need almost $250,000 to cover their health care expenses during their retirement. Estimates conclude that Medicare will cover approximately 50-60% of that amount, so the remainder will need to come from your pocket. It’s crucial to come up with a gameplan to handle healthcare expenses.

Keep investing smartly

Most likely, if you’re already approaching retirement, you have a decent sum of money socked away in an IRA or 401(k). If so, great job! However, now is not the time to cash out. It’s important to keep investing as you approach retirement, and even into retirement itself.

You may wish to change how you invest though. The closer you get to retirement, the further you should move away from investing in comparatively risky stocks. Re-route those funds towards the much safer bond market. It’s always wise to speak with a financial advisor prior to making any big decisions.

Plan your taxes

If your retirement funds are in some combination of Roth IRAs, Traditional IRAs, and 401(k)s, you’ll want to speak with a financial advisor or CPA about how to withdraw your funds over time in the most tax-advantaged way. This is because some of your retirement funds are pre-tax, while others are post-tax. Planning is needed to keep your annual tax bill as low as possible in retirement.

Consider downsizing your home

Many people purchase their homes in their twenties or thirties, just around the same time they start having kids. As such, many retirees find themselves living in homes that can accommodate a larger family, even though they don’t need that additional space. In this case, it’s worth exploring downsizing your home to something more suitable for your current and future needs.

Maximize your Social Security benefits

You’ve contributed to Social Security for your entire working life and now it’s time to cash out. However, you also need to spend some time looking at your options when it comes to Social Security. While it’s possible to cash out at the age of 62, you’ll greatly reduce your monthly checks when compared to cashing out just a few years later. Speak with your advisor to decide if that’s a good trade-off for you, or if you should wait the additional time.

With a little planning and patience, your retirement can be everything you always dreamed of – both personally and financially. Enjoy it!

4/5/24

 

 

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