In today’s video, I’m going to be talking about Five Things That You Should Do When You’re Five Years Away From Retirement.

So right off the bat, number one is Get Organized. 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 401K plans at work, or some IRA accounts. Maybe your spouse has some retirement plans or old pension benefits. So the first thing you want to do is bring all of that information together. We also want to start identifying how some of those retirement resources are going to be able to work for you to provide you with the retirement lifestyle that you want. We call it your Retirement Gap.

Fortunately, we have  a couple of tools available to help you with this process. One of these tools is our 7 Core Elements of Retirement Planning Video Series and Action Plan. It’s a do-it-yourself type of a plan where you can start to get some of this financial information organized. Of course, we also do financial planning as well. We call it our WealthVision Comprehensive Financial Plan where we do it for you.

Number two is we want to look at how we can kind of optimize the retirement assets that you have. We call this shift money to tax advantaged accounts. So as you approach retirement, we find that your cash flow tends to improve. 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 are going well you’re making a little bit more money. So you might have more cash flow available to save money for retirement, but we also want to look at where some of that money is being saved. What we find for a lot of people is they have money in non-retirement accounts, taxable accounts that you have to pay income taxes every year on. We look for ways or opportunities for you to shift that over into tax advantaged accounts.

So take a look at your accounts. Are you maxing out your 401K plan? Some 401K 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.

Number three is Know Your Healthcare Options. Understanding this is very important because there are some big, big price tags on this. If you’re working, and your employer is offering healthcare insurance now, you want to visit the HR department. Find out what they do about, if anything, in retirement. Are there any options to continue that healthcare, especially if you are going to 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 idea of how much that healthcare is going to cost because you don’t want to get blindsided by it. There was a recent study by JP Morgan a couple years ago, and they said that if you had to go out into the Affordable Care Act exchanges, for a 64-year-old it would cost about $8400 a year per person for just a Silver Plan. That’s not even the top-level plan! So understand what those options are, and check with your employer.

Number four is think about your Plan For Income. Hopefully, if you’ve done some financial planning, you’ve identified some of your gaps. You want to know where those gaps are, and how much money will you potentially have to pull out of your 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 401K? You don’t want to get hit with any penalties. Start planning out what that income strategy’s going to be, and have some of that money in a more conservative 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 going to come from.

Number 5, and I love this one, because I think it kind of fulfills two issues here with retirees, is to Consider a Semi-Retirement. I think the idea for most of us, and in fact what I think about my own retirement is 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 just sounds a little bit abrupt. We’ve been talking to a lot of clients about semi-retirement, as a way to ease your way into a retirement situation where you go to a part-time status, 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. It can also help you sustain some of the early retirement spending needs that you’re going to have as well. Especially if you want to do strategies like delaying social security benefits. Having some of that semi-retirement income can really help fill some of those gaps. So think about semi-retirement. It’s something that can be done during the planning process where you can see how that income might help your overall financial situation.

Canyon Bill

What I Do

I help individuals make the transition from working to retirement.

As you approach retirement you will be making some of the most important financial decisions of your life. Most of these decisions don’t get a do-over, once you’ve made them your stuck.

My goal is to help you get the most out of your retirement resources. I do this by coordinating and optimizing what I call the 7 Core Elements of Retirement Planning.

It all starts with a plan!

We use advanced financial planning software to help you understand your retirement cash flow so you know where the gaps are.

Understanding your retirement gap is the foundation to getting the most out out of your retirement resources and avoiding costly mistakes.

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