Preparing for retirement is pretty square-shooting. Well, that is until you actually start to approach it, then the whole game changes.
As you come closer to retirement, one has to take into consideration all of the twists and turns that they might encounter on the road to retirement. Most people are forced to keep a watchful eye on the road in order to avoid taking the wrong turn and losing financial safety.
When you’re about five years away from retirement, a smart decision is to focus less on amassing money and more on protecting what you already have. Long-term investing is key. This is also a time where you are put in the hot seat and are forced to make important decisions regarding your (near) future. Common questions that arise around this time are: When do I take out Social Security? How will I manage my savings so I don’t run out of money? How do I hedge against long-term care costs?
At this point, if you aren’t working with a financial advisor, finding one should be at the top of your ‘To-Do List’.
Here is a list of 5 plans that you should have in place if you are nearing or in retirement:
- Income Plan: Out of all the end-goals in retirement planning, making sure that you never run out of money trumps all. If, for instance, you don’t get a pension through the company in which you work, talk to a financial advisor as he or she will be able to help you figure out how you can create a steady (and safe) flow of income.
- Protection Plan: Sadly, the death of a spouse, a chronic illness or other unpredictable and devastating events can shatter an individual’s retirement end goals. However, as the financial world continues to evolve, there are now options available to help individual’s maintain their savings.
- Growth Plan: One crucial piece of advice that those near or in retirement should follow is: reduce the amount of risk in your investment portfolio. For instance, if the market plummets while you’re trying to make withdrawals, there’s a chance that you won’t financially recover from the downturn. If you have determined your income needs, financial advisors recommend that you put aside a portion of your money in order to act as a hedge against inflation.
- Tax Plan: Contrary to popular belief, taxes won’t necessarily be lower in retirement. This is why it’s crucial for those nearing retirement to hire a financial advisor as they will be able to pinpoint tax-efficient investments. Once the advisor finds these investments, he or she will illustrate how and when you should make withdrawals from these assets.
- Estate and Legacy Plan: This is probably one of the most important aspects of retirement to consider. It’s vital that you document your wishes if you want to make sure that your friends and family are taken care of. Instead of putting pressure on your loved ones to make these decisions, create and annually re-evaluate your legacy and estate plan.
It’s crucial that you find a financial advisor who can address these five challenges. If they can’t, you might want to look elsewhere. It’s always best to find an advisor who has previous experience working with retirement planning.
Featured Image: depositphotos/Anita_Bonita
