Are you starting to think about retiring? Do you have a financial plan in place? If not, are you wondering if it’s too late to start? There are many variables to consider when evaluating the right time to retire. If you have a plan in place, have been monitoring it, and have taken the necessary steps, you should be on track to reach your goal. If you haven’t, it’s never too late to assess where you are and make the necessary decisions to position yourself for retirement. This article provides a starting point as you consider your retirement plans.
Psychological Considerations
Shifting to a retirement mindset can be a difficult and emotional decision. Your work environment plays a significant role in how long you choose to continue working. Are you mentally ready for the transition? Staying active—both socially and physically—is key to maintaining your health and making the most of this new chapter. Travel, family, personal interests, and charitable activities can bring fulfillment and lead to a rewarding retirement.
Setting Goals
Your retirement goals shape everything about your plan. Where do you want to live? Do you want more than one home? Do you want to be near family? When do you want to retire, and what will you do in retirement?
Regardless of your specific goals, it’s essential to communicate them to your advisor. Your advisor can develop a strategy based on your priorities and show you how to achieve your goals—or explain the trade-offs required to reach them. Clearly defining your goals makes them more tangible and meaningful. Most importantly, it helps you distinguish between what is achievable and what may require adjustments. Establishing priorities and understanding trade-offs will help you create and implement a realistic plan.
Taking Inventory of Your Finances
This is often the most challenging part, and the first step to help you set a clear financial goal. Before you can create a solid financial plan, you need to take stock of where you stand. Taking inventory of your finances will help you understand what you have, what you owe, and what adjustments may be needed for a secure retirement. When you establish a goal within reach and take the necessary steps, you significantly improve your chances of success. Below are some key steps in creating a solid financial foundation for retirement:
- Take inventory of your investments and assets.
- Prepare a budget with your current expenses and note any changes that will occur when you retire.
- Review your debts and work to eliminate credit card debt. Ideally, mortgage and car loans should be the only debts carried into retirement.
- Evaluate your insurance needs, including life, disability, and long-term care coverage. Consider which policies you need to maintain as your circumstances change.
- Thoroughly review your estate documents to ensure they are up to date and align with your wishes.
- Check your account beneficiaries to confirm they reflect your current situation.
- Assess your medical insurance to ensure you have adequate coverage for retirement.
Making a Financial Plan
Meeting with a financial advisor can help you put the pieces together and develop a strategy to achieve your goals. Your advisor becomes your partner and confidant, guiding you as life evolves. While a well-crafted plan can set you on the right path, life inevitably throws curveballs—whether it’s death, disability, illness, or unexpected financial shifts. An advisor can help you navigate these challenges while ensuring your plan remains adaptable.
A comprehensive financial plan should include a cash reserve for retirement and a global allocation and withdrawal strategy that aligns with your goals. Having worked with many clients over the years, I can tell you that while the road may be long, creating a plan significantly increases your chances of success. It’s never too late to start.
