I Need to Take a Class on How to Retire

I recently had a client say this to me during our meeting because there is so much to consider. She is in great health, planning to work until at least age 70, if not longer, and not at all interested in slowing down. She is about six years from her goal to stop working. Knowing this, we met to discuss her current retirement plan offerings and the allocations, but we ended up discussing much more than just cash flow, retirement accounts and Social Security projections.

First, I let her know that she is far from alone. As many healthy Americans age, not everyone is eager to leave what he or she does for a living. For some, it’s the security of a monthly paycheck and healthcare coverage. However, for many it’s the fact that they are still vital, active and engaged with their professional lives.

You don't have to figure it out alone.

You don't have to figure it out alone.

There are key steps to take several years before you contemplate retirement. If you are working with a financial planner, you should be preparing at least five years before your retirement goal year, if not even further out.  If you are close to retirement, call your financial planner now!

What to consider…

Can you retire? You need to sit down with your financial planner and project what income and expenses you will most likely have in retirement. You need a good understanding of all your income streams from retirement plans, savings, pensions, investment accounts, Social Security, etc. You need to know when and how to tap each source to maximize the benefit so timing and planning are key. For example, my client wants to work until at least age 70 and has no plans to touch her Social Security. She wants to delay taking Social Security to qualify for the maximum benefit amount.

What about health care costs? You need to know when and how to file for Medicare, the costs and whether you will need a supplement plan. If you have other medical insurance coverage, you need to understand how or if the coverage works together. Most importantly, you need to project the costs and account for this expense.

When should you retire? Whether you hate your job or love it, there comes a time for many of us to call it quits. If you know you want to retire, make sure that you coordinate the retirement age with the benefits available to you. You do not want to retire too early and miss key plan contribution dates for your workplace retirement or pension plans. Nor do you want to work longer than needed.  Review any workplace pension rules, retirement plans, and Social Security dates to be sure you are getting the maximum benefit possible. No matter what you do, timing when to leave the workforce in coordination with your benefits and retirement income is very important. For more, see my blog post How to Pick Your Retirement Date

How’s your debt load? If you are close to retirement, debt free should be a goal. There is an argument that having a mortgage in retirement may be a benefit, but this is something you should discuss with a financial planner to make sure it is a benefit for you. Otherwise, you should make sure you are entering retirement without consumer debt.

Historically, people would quit their job and never look back. Today, many retirees find that their knowledge is still valuable. Instead of working as a nurse full-time, you retire and find that you can teach part-time. Perhaps you turn a lifelong hobby into a side-hustle that you love. Maybe you decide to volunteer a few hours per week at the local community garden. Knowing what you want to do, how your benefits will work, and when best to retire can make the transition more enjoyable and profitable.   

As an independent Certified Financial Planner™, I can help you with a retirement strategy tailored to your goal, timeline and resources. Contact me and let’s get started! #talktometuesday #retire #Hireaplanner #socialsecurity #retirement #spend