Ep. 45: 9 Things To Consider Before Retirement

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Welcome back to Money Matters, my name is Michael and I’m here to help guide you in becoming a better and more confident investor. Retirement planning is a huge part of what we do here at Colby Financial Guidance. And rightfully so! We have client relationships who have spent decades investing and saving their hard-earned money and now that they’re getting closer to retirement and it has become time to cross our ‘t’s and dot our ‘I’s especially when we get to the last decade before retirement. Here are 9 things I’d encourage you to do as well, or better yet come work with us and we’ll do it together.

Number 1. You have to take inventory and assess your current financial situation. And by that, I mean know what your net worth is – I’m talking mortgage, equity, all assets from all accounts, money in the bank, the debt you have, and when it will be paid off. You have to know where you are to know where you’re going.

Number 2. Know your tax projections. This will help when we get into retirement when dealing with the options to best execute your cash-flow in the most efficient tax-friendly manner. An example is keeping your taxable income under a certain dollar amount as to not kick you into the next tax bracket.

Number 3. Replacing income and expenses. Have an idea of how much you’re going to fall short of not receiving a paycheck anymore and what your living expense is going to be. For example, being, say you get paid $100,000 a year. And in retirement, your social security is going to pay you say $35,000 a year. How are we then going to make up the $65,000 difference? Do we even need that much? And then how are you expense going to change in retirement?

Number 4. Play catch up. It’s never too late to save! And when you’re over 50 you can add even more money to certain accounts as a catch-up provision. So decide which tax-deferred account are best to take advantage of in this final stretch to make sure you’re on track as you head into retirement not to outlive your resources!

Number 5. Roth conversions. Staying in the same tax-deferred conversation. Are Roth conversions appropriate for your needs? Do you have too much tax-deferred income and would it make sense to start accumulating tax-free income strategies and instead pay the tax now?

Number 6. Pay Down Debt. Retiring with large amounts of debt is like going for a job with a weighted vest on. You’ll of course move, but it's way more difficult! As you focus on retirement focus on the high-interest debt first. In this instance – interest paid is interest earned!

Number 7. Healthcare projections. Chances are you will be paying healthcare expenses in retirement. Have an idea of what the average is for your age in your state! A quick google search will help with this. According to New York Retirement News dot com, recent reports indicate a typical 65-year-old retiring in 2018 would spend well over $100,000 to cover medical costs throughout retirement. Be ready and know your Medicare coverage.

Number 8. Retirement Spending: Have a budget setup in retirement. This doesn’t have to be down to the dollar – I know budgeting is frustrating, but have an idea of how much you can spend, and have some goals on possible items. Boats, vacations, gifts, etc.

Number 9. Education. With online access to information, it’s never been easier to take time to educate yourself on your retirement options. Or if that’s not for you find someone you trust that understands what your needs are. Someone who can help you navigate these times so you can spend time living and not worrying about your entire financial picture.

If you’re looking for some guidance, or simply want to try a new relationship then I encourage you to give me a call. I’d be more than happy to have a conversation to learn more about you and discuss how my team and I can help you get prepared and navigate your retirement years answering all questions you may have.

I thank you for watching and as always, thank you for giving your finances that attention that they deserve!