Will You Retire in 2021?

Have you decided to retire in 2021?  If so, congratulations—it’s a big step and for most, it’s a once in a lifetime decision.

Even if you’ve planned ahead, you may still be a little apprehensive about this monumental life transition. 

Here are a few last minute things to consider or confirm as you embark on this new and wonderful journey.

Budgeting/Cash Flow

Have you scrutinized your living expenses?

Do you know how much you expect to spend in retirement?  Will any expense “buckets” decline, or go away?  Do you expect any new expenses when you retire?  Do you have a firm handle on which of your expenses are fixed and which are discretionary?

Income and Taxes

What will be the primary source of your income?  Will you take Social Security now, or delay this important benefit?  Do you have a pension?  If so, should you choose a survivorship option to protect your spouse?

When taking distributions from your portfolio, which type of account will you pull from first?  Will you make estimated tax payments, or simply withhold taxes from the distribution?

Do you understand your tax situation and are there opportunities to shift tax buckets, through Roth conversions, or other “income acceleration” strategies?  Is it possible to take advantage of the 0% capital gains tax bracket?

Investing/Portfolio Management

Is your portfolio reflective of expected distributions? 

Have you adjusted the stock/bond mix of your portfolio to help reduce the possible impact of “sequence of returns risk” in the early years of retirement?

Is your investment strategy within each type of account (IRA, Roth IRA and Personal Brokerage Account) “tax optimized” such that you benefit from  both current and possible future tax laws—as well as your distribution and risk preferences?

Medical and Insurance

Do you have health insurance?  Have you signed up for Medicare, Medicare Supplement and do you understand your deductibles, co-pays, etc.?

Do you have a plan for long term care expenses?  Can you afford to “self-insure,” or is long term care insurance a better alternative?

Have you evaluated your options for long term care insurance? If you have a policy, do you understand your coverage level and the policy “triggers?”

Important Legal Documents

Are your estate documents in order?  Do you have current General Durable and Health Care Powers of Attorney?  Do the “decision makers” in these documents understand their responsibility and your wishes?

Are your brokerage accounts, bank accounts and other property appropriately titled to ensure a hassle-free and seamless transition should you pass away or become incapacitated?

Have you checked your beneficiary designations on IRAs, 401k plans and life insurance policies recently?  Are they consistent with your estate planning objectives?

The Key To A Fulfilling Retirement...

While all of the financial issues listed above are very important, we have found that one of the most critical elements when deciding to retire is planning how you expect to spend your time. 

Studies have found that people are happiest in retirement when they have planned activities and are intentional with how they spend their time. 

What activities will you pursue on a day-to-day basis? 

Have you developed hobbies, volunteer or charitable opportunities that you are passionate about?  Will you travel?  What types of groups or other organizations will you join that can give you a sense of community and belonging?

Making the decision to retire is an important and exciting one.  We hope that by focusing on both the financial and personal aspects of retirement that you will gain a sense of fulfillment, satisfaction and peace of mind.  Enjoy the transition into this next phase of your life!