Approximately 10,000 Baby Boomers are turning 70 years old daily for the next 17 years. This 19 year American generation, born between 1946 and 1964 was once the largest in the USA. As often reminded by our parents, the years roll by much quicker than expected. When it comes to saving for retirement, why leave it to chance? The earlier you plan and prepare for retirement, the more likely you are to achieve your goals.
Many of us enter the workforce at the earliest age possible without a clear vision of what the last phase of our lives will look like. There are many things to consider as you near retirement and there’s not a better time to plan than now.
Within 5 to 10 years of your planned retirement date, you should have a written financial plan and retirement analysis. Actually, seeing your plan in black and white reviewed by a financial advisor trained to mathematically analyze and test your plan over time under various situations can provide added peace of mind that you are on track. The written plan should include your projected Social Security benefits, estimated health care and long term care costs, ways to reduce the taxes you pay, your investment strategy and how you plan to protect your assets and legacy for your loved ones.
A common question for retirement is regarding Social Security. When should you take your benefits? While it is tempting to take your benefits as early as possible, you should make an educated decision and be aware of the potential long-term cost of an early SS check. Your projected benefits are based on your age, amount of social security wages/earnings and at least 40 quarters of earnings. Other factors include if you are single, married, divorced or a widow/widower. Laws change, such as the major changes in spousal benefits in the Bipartisan Budget Act of 2015, and you may need to adjust your planned start date to collect your benefits.
A few other things to evaluate include your projected Health Care and Long Term Care Costs and determine the best way to pay for those projected costs; tax Reduction – tax deferral and it is possible that you will be in a higher tax bracket when you retire; and Investment Analysis and Retirement Income – be specific about securing a retirement ‘paycheck’.
After three to four decades of hard work and dedication, don’t forget to protect your Legacy. By having an updated estate plan, you can be prepared, create peace of mind for your loved ones and potentially save probate and other legal costs. This includes a Last Will & Testament, Living Will, Durable Power of Attorney with health care directives and a Revocable Living Trust. Keep a list of your passwords and a record of where your important documents are located. Otherwise, how will your loved ones know where the safe deposit box is located or the code to your personal safe?
Retirement planning isn’t a one-time thing or static document. It is a process that changes on a quarterly and annual basis. So the sooner you plan, the better off you’ll be and the easier it will be to live your vision.
Prior Planning Pays as we enter football season and our retirement season of life, remember that a ‘Hail Mary’ may work in football and help you reach a touchdown but you may not have enough points on the board to win the game.
Founding Partner, CFP, CPA
MyAdvisor Wealth Management