An excerpt from our Retirement Plan Checklist
Depending on when you wish to retire, there are certain things you should check off your Retirement Plan Checklist at certain points in advance. Some of these things will revolve around you reaching a certain age, where you’re retired or not (such as Medicare). Other items on your checklist should be done according to your proximity to retirement, and not necessarily how old you are. Today we’re going to review some of the items you should address when you’re 10-15 years from retiring. Just remember, you will never be able to plan for everything life throws your way, not all of this will apply to everyone, so you need to be flexible and willing to make changes.
10 to 15 Years from Retirement
You’ve still got a way to go before you hand in your keys and go on that celebratory retirement cruise. However, taking actions now to prepare for your retirement can pay off big.
- Create a budget and monitor your spending. “Budget” does not have to be a four-letter word. Many people get to retirement, never bothering to take note of what it’s costing them to live month-to-month. Get started by simply tracking your spending behavior. Review each month what you’re spending money on, and how much of your paycheck is being saved for the future. Working with a financial planner, you can determine if your savings rate is adequate. If it’s not, you can work with your financial planner to determine where you may be able to adjust your spending. And just like that, you’re budgeting!
- Evaluate your investment plan. At this stage, it’s likely that most of what you’ve saved for retirement is tied up in your employer’s retirement plan, such as a 401(k). You may be limited in what you can choose to invest in. You’ve still got a decade or more to go before you retire, so if the stock market were to experience a large decline, you should think about that as if stocks have “gone on sale.” This far out from retirement, you can most likely ride out the next market correction. You don’t want to be greedy here, but you do want to give yourself a good chance at growing your retirement accounts for the future. You can work with a financial planner to determine how much of your investments should be in aggressive investments, like stocks or real estate, and how much should be in more conservative investments, like bonds or money market funds.
- Should you save to a Traditional (pre-tax) IRA, or a Roth (after-tax) IRA? There’s usually no clear-cut answer to this, unless you can accurately predict what tax rates will be in the future. The general advice is this – if you determine that you will be in a lower tax bracket in the future than you are now, you want to delay (defer) paying taxes until you get to retirement, and a Traditional IRA would make sense. Conversely, if you estimate that in the future, you’ll be in a higher tax bracket, it would be better to pay the taxes now as opposed to later, and a Roth IRA would make sense. You should have a good idea of what your current tax situation is, and you can work with a tax professional or financial planner to make some educated assumptions about your future tax situation.
- Estate planning is not just a tool for the 1%! Many people wrongly assume that since they don’t have a net worth number that is at least 7 or 8 figures, they don’t need an estate plan. In fact, there’s much more to estate planning than the transferring of assets upon death. For example, a typical estate plan should consist of (at a minimum) a last will and testament, advanced medical directives, and a power of attorney. If you’ve not already created an estate plan, now is the best time. An estate planning attorney or financial planner can help determine the type of estate plan that best fits your family’s needs. Once you have your documents in order, store them in a safe location, and review your plan annually.
On America’s Wealth Management Show this weekend, Dean and Bud will be covering many of the topics addressed in the Retirement Plan Checklist and how it’s important to make sure you’re on track to reach your one best financial life. Don’t miss it this Saturday at 11AM on 98.1FM KMBZ. If you’d like to follow along with Dean and Bud during the show you can get your copy by filling out the form below or visiting our Retirement Planning Education Center.
Remember, these are just some of the things you should address when you’re approaching your retirement. As you get closer and closer to the day you’re liberated from the working world there are additional pieces you should tackle. Our Retirement Plan Checklist identifies items to address when you’re 5, 3, 2, and 1 years from retirement as well as things you need to take care of at specific ages. Also included is the actual checklist portion which can be thought of as a roadmap to identifying how prepared you are for your impending retirement.
As we mentioned above, you can download the Retirement Plan Checklist by filling out the form below or visiting our Retirement Planning Education Center where you can find additional resources as well.
Investment advisory services offered through Barber Financial Group, Inc., an SEC Registered Investment Adviser.
The views expressed represent the opinion of Barber Financial Group an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Barber Financial Group does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.