Reaching Retirement
Saving towards retirement is a concept that affects most everyone. . The goal has traditionally been to save diligently from our paycheck while we work in the hope that someday we can live a comfortable life without them. By trying to save more and starting the process early, there is a better chance of reaching retirement goals.
But the road to retirement is a long and winding one. Each of us joins it at a different point, and we make different turns, and exit at our own destinations. The individuality of the journey to retirement makes it unique in that we find ourselves on the longest and most impor tant road of our lives without a perfect map.
Reaching retirement is almost an afterthought following an entire career of planning. What happens now?
Having spent more than half of your life saving and working towards this goal, what do you need to do to make sure that you can afford to continue living a comfortable lifestyle without a regular paycheck? There are a few things you can do upon reaching retirement to help you live with both freedom and peace of mind.
Evaluate Your Recurring Expenses
In order to put together a plan to live your desired lifestyle, you need to understand what your monthly expenditures will be. Some old familiar expenses like train passes, parking, and dry cleaning may be left behind with the departure from the work force. However, some new expenses are sure to appear as you may need to take on the costs of additional healthcare expenses, long-term care insurance, and hopefully any costs associated with a new or re-invigorated hobby. Calculating how much you need to support your wants in terms of hobbies and entertainment alongside needs like housing, taxes, and food can help inform you and your financial professional how to best budget.
Source: Social Security Administration
Decide When To Take Social Security
While you were socking away a portion of your paycheck towards retirement savings another portion of your paycheck was being siphoned off to Social Security.
When you decide to begin taking your Social Security benefit will impact how much you will receive.
If you leave the workforce early, by choice or otherwise you most likely will need to wait until you have reached your full retirement age to receive your full benefit. Conversely, if you can delay receiving your benefit until after retirement age, you could receive an increased benefit. Of course, the social security program is not guaranteed and is subject to change. As you approach your decisions on retirement planning, be sure to keep a finger on the pulse of any Social Security benefit updates by visiting the Social Security Administration website at https://www.ssa.gov/.
Source: Social Security Administration
Shift The Focus To Income
Over the course of your career, your focus was likely on saving towards retirement and your portfolio’s growth. Maximizing the size of your retirement nest egg was the primary goal. As you approach or have reached retirement, you will need to assess the makeup of your portfolio and if it is suited to your income needs. Particularly if you have retired early and are able to hold off on claiming your Social Security benefit, an income-focused approach can help fill the gap until you file.
Investing for income doesn’t have to mean loading up a portfolio with only bonds or other fixed coupon-paying assets.
A total return approach may be a viable means for generating monthly income by re-balancing as needed to generate cash.
However there are no guarantees in investing. You should be aware that with all investments there is a risk of losing principal and that income from investments may fluctuate and there is not a guarantee of any return.
Of course, these are not the only things you need to be aware of at this important juncture of your life. Working with a financial professional in retirement can also be especially valuable. Your financial professional can help you to put together a plan to suit your individual needs.
To learn more, please contact your financial professional.
