5 Things To Do 5 Years Before Retirement
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
– Hi everyone, Bill Lethemon
here for MoneyEvolution.com. In today's video, I'm
gonna be talking about five things that you should do when you're five years
away from retirement. Okay, so right off the bat,
number one is get organized. So, if you're planning for
retirement you might have a lot of your financial information scattered into a whole
lot of different places. Maybe you've got some
401(k) plans at work, or maybe even an old
401(k), some IRA accounts, maybe your spouse has
some retirement plans or old pension benefits. So the first thing you wanna
do is really kinda bring all of that information in together. We also wanna start to, in that process, start identifying how some
of those retirement resources are gonna be able to work for you to provide you with the retirement
lifestyle that you want. We call it your retirement gap. So fortunately, we've got
a couple of tools available to help you with this process.
One of those, and we'll
put a link right below today's video, we just
recently launched our 7 Core Elements of Retirement Planning video series and action plan, so that's kind of a
do-it-yourself type of a plan where you can start to
get some of this financial information organized. And of course, we also do
financial planning as well. We call it our WealthVision
comprehensive financial plan where we do it for you. So we'll put links to both
of those below today's video, but number one is get organized. Number two is we wanna
look at how we can kind of optimize some of those
retirement assets that you have.
We call this shift money
to tax advantaged accounts. So as you approach retirement, for a lot of people, we
find that your cash flow tends to improve or get
a little bit better. Maybe your kids have
moved out of the house, you're done paying for college, they're kind of
self-sufficient on their own. Hopefully if your career
and your job is going well you're maybe making a
little bit more money. So you might have a little
bit more cash flow available to save money for retirement. But we also wanna look at where some of those
monies are being saved. And what we find for a lot of people is if you have money in
non-retirement accounts, taxable accounts that you have to pay income taxes every year on, are there ways or opportunities for you to shift that over into
tax advantaged accounts.
And we find for many people, there are. So take a look at, are you
maxing out your 401(k) plan? Some 401(k) plans allow you
to save an additional 10% in an after-tax savings vehicle. There's a recent tax
law that now allows you to move that money directly
to a Roth IRA account, even if you're over the income limits. You can contribute money to IRA accounts or Roth IRA accounts, there's
lots of strategies there, but can we shift money from
one side of the balance sheet where you're not getting
that tax advantage over into a retirement
account, is number two. Number three is know
your healthcare options. This came up recently, and it was listed as one
of the number one concerns for retirees going into retirement is how much is my healthcare gonna cost? And understanding that is very important because it's some big,
big price tags on this. If you're working, and
your employer is offering healthcare insurance now, you
wanna visit the HR department. Find out, well, what do they do, do they do anything for you in retirement.
Is there any options to
continue that healthcare, especially if you are gonna
be retiring prior to age 65 when you're eligible for Medicare. If you're married, check out
what your spouse offers too and compare those different plans, start putting together some ideas of how much that healthcare is gonna cost because you don't wanna
get blindsided by that. In fact, there was actually a recent study that JP Morgan did a couple years ago, and they actually said
that if you had to go out into the exchanges, the
Affordable Care Act exchanges, for a 64-year-old it would
cost you about $8400 a year per person for just a Silver Plan, so that's not even the top-level plan. So understand what those options are, check with your employer,
that's number three. Number four is you wanna think
about your plan for income. So, hopefully, if you've
done some financial planning, you've identified some of those gaps, you know where those gaps are. And what we find oftentimes is especially early on in retirement, where your income and expenses still may be a little bit more variable, you wanna understand what
some of those gaps are and how much money will you
potentially have to pull out of those retirement accounts.
Are you eligible to take money out of those retirement accounts? Are you over 59 and a half if it's an IRA, are you over 55 if it's a 401(k)? You don't wanna get
hit with any penalties. Start planning out what that
income strategy's gonna be, and maybe having some of that money in a little bit more
conservative type of investments so you're not blindsided by,
oh my gosh, I'm retiring, I need to take $20,000 out
of a retirement account and guess what, the stock market's down. So think about that plan for income and where's the money gonna come from. And then number five, I love this one, because I think it kind of fulfills two issues here with retirees, and it's consider a semi-retirement.
So I think the idea for most of us, and in fact what I think
about my own retirement when that happens, the idea of
working 40, 50 hours a week, and then all of a sudden one
day just throwing in the towel and never working again
sounds a little bit abrupt. So we've been talking to a lot of clients about semi-retirement,
and easing your way into a retirement situation where maybe you go to a part-time status, maybe you do some
consulting for a few years, or maybe you just do a job that
you've always wanted to do. Maybe it doesn't pay a lot, but it's fun, and you enjoy doing it, and
it can also help to sustain some of that early
retirement spending needs that you're gonna have as well. So again, and especially
if you wanna do strategies like maybe delay social security benefits, having some of that semi-retirement income can really help fill
some of those gaps there.
So think about semi-retirement,
that's something that can be done during
the planning process where you can see how
that income might help your overall financial situation. That's it for this video, there you go,.
