It’s not uncommon to hit age 55 and start thinking very seriously about impending retirement. Some individuals reach this age and feel highly confident in their ability to enjoy a peaceful, financially stable retirement; others are prone to worry, concerned that maybe they haven’t done or saved enough.
Certainly, the 55-64 age range is a good time to reflect on your retirement plans and to verify that you’re on track for financial stability. The best way to do this is to meet individually with your financial advisor, and to go over your retirement accounts in some detail.
As you prepare for this sit-down meeting, here are a few specific considerations to keep in mind.
Are You Ready to Retire?
If you’re within 10 years of retirement, the most fundamental question you can ask yourself is: Am I ready? To assess this, you’ll need to gather a few important documents, including current savings and checking account balances; your income tax rate; the average rate of return on your savings; your current income rate; and a projection of roughly how much income you’ll need during your retirement years. Also visit www.SSA.gov to see how much you’ll be getting in terms of Social Security.
As you go over these documents with your financial advisor, you’ll get a good sense of how ready you really are, and what you need to do about things like Social Security, debt, and the kind of lifestyle you’ll be able to afford in your retirement.
Hopefully, you’ll find that you are retirement-ready—but if not, don’t panic. This just means you’ll need to make some changes—such as cutting back on everyday expenses; adding some additional funds to your retirement nest egg; getting some freelance work to supplement your current income; changing your retirement plan contributions; or delaying your planned retirement. Another tip for those nearing retirement: Do a “dry run,” living on your retirement budget for a full year just so see how it goes, then revise that budget as necessary.
How Strong is Your Portfolio?
Another key consideration is the strength of your portfolio. Again, this is something to discuss in detail with your financial planner, but generally speaking, those who are nearer retirement will want to take a more conservative stance with their investments, ensuring that they do not lose too much of their principal. You might also consider reallocating assets in your portfolio to encompass varying risk levels—helping you to continue growing your portfolio while mitigating your risk.
Certainly, the decade before you retire is no time to ignore your investment portfolio! Make sure you talk with your financial advisor about what you hope to accomplish through your investment strategy.
What About Debts?
A final area of concern for those nearing retirement is debt. High-interest debt adversely impacts your ability to save, and it cuts back on the money you have available for retirement. It’s vital to pay off these debts whenever possible—including credit card balances that have high interest rates.
The ideal is to enter retirement debt-free. This may not be feasible for you, but your financial planner can recommend the smartest way to prioritize your debt payments.
The Home Stretch of Retirement Planning
For those who are 55 and older, retirement may seem like it’s finally within reach—but don’t let that be an excuse to grow slack in your retirement planning efforts. If you’re ready to look at some of the numbers and see what kind of place you’re in with your own financial planning, reach out to an advisor at Stonepath Wealth Management today; access our retirement planning checklist and make an appointment to speak with us in person!