Preparing for Retirement in Your Final Working Years :: Wamhoff Financial & Accounting


Preparing for Retirement in Your Final Working Years

The last three to five years of your working career are critical to your retirement planning. Bob Wamhoff, president of Wamhoff Financial Planning & Accounting, outlines the top things you should do to prepare:

  • Create a retirement budget:
    • Outline a plan for what your anticipated expenses will be in retirement. This includes all of your fixed monthly bills, as well as a budget for vacation, holidays, and other expenditures.
    • Be sure to put a cushion in place for emergency and unexpected expenses. Just as you had a “rainy day” fund during your working years, you’ll want to have this in retirement as well.
    • Estimate your anticipated income from all sources, including social security and your savings. You may need the help of a financial advisor to help with these calculations, and make suggestions.
  • Create a post-retirement investment plan
    • Retirement doesn’t mark the end of your savings days. Chances are you’ll live 25-30 years past retirement!
    • Your post-retirement investment strategy should take your needs and risk tolerance into account, which are different from when you were in your wealth accumulation years.
  • Develop a disbursement strategy
    • How you take your money out in retirement is just as important as how you put it in.
    • Consider taking distributions from your non-qualified plans first (Roth IRAs and other investments purchased with after-tax money) as you’ve already paid taxes on this money.
    • Taking distributions from your qualified plans (your 401k, traditional IRA purchased with pre-tax money) last could put you in a better tax situation as you’ll still have to pay taxes and may be in a lower tax bracket later in life.
    • Determine the best time for you and your spouse to begin taking Social Security. Deferring can be a good option, if your retirement income allows, as benefits increase by 8% each year until you reach age 70, which is the latest you can begin taking it.
  • Do an insurance check-up
    • Is your life insurance adequate and up-to-date? Are your beneficiaries correct?
    • Do you have a long-term care policy? If not, it’s best to purchase one sooner rather than later as rates increase with your age.
    • How will you get health care coverage in retirement? Be sure that your coverage is adequate for your needs, and that you won’t experience any lapse in coverage between the time you retire and the time your plan will kick in.
  • Revisit your estate plan
    • Do you have the proper estate planning strategy in place? Is your will accurate and up-to-date?
    • Have you designated someone who will have Power of Attorney to make decisions on your behalf if you become unable? Are your wishes clearly outlined?