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Next Stop – Retirement (Enter Carefully & Confidently)

Next Stop – Retirement (Enter Carefully & Confidently)

| October 09, 2020

After many years of living the work experience, retirement is finally within sight.  Yes, it’s hard to believe and now that you’re on the brink, you’re excited, but at the same time, apprehensive.  You’ve had 40 or more years to become accustomed to your situation.  You certainly know the drill; it’s become a regular routine.  Your waking hours have been largely consumed by work or going to and from work.  Even your financial life has gravitated to auto pilot as you have regularly contributed to your retirement plan.  These are all good things as they have enabled you to get to this point. 

However, you realize that retirement is a totally new venture and instinctually you know that life is about to be dramatically altered.  The bottom line is that how you spend your time and utilize your savings and investments will change. 

There will be emotional issues and I will address these in another blog.  However, let’s discuss the financial issues.

    1. Budget  

      Hopefully you have established a budget which takes into consideration your planned retirement activities and hobbies.

    2. Emergency Savings 

      You will still need to have dollars for emergency situations that will pop up periodically.

    3. Tax Strategy 

      It will be very important to have a tax strategy in consideration of your retirement and investment accounts.  This is also relevant to whether or not your social security is taxed (from the standpoint of a possible part-time job in retirement as well as from the calculation of your modified adjusted gross income).

    4. Choice of Pension Option 

      If you have a pension, you will need to determine which income option to take, especially in consideration of your spouse, your ages, health and your other potential investment income.

    5. Social Security 

      When to begin Social Security is an important decision, again in consideration of your spouse, estimated longevity, income needs, and other retirement income sources.  Note that decisions regarding a pension option selection and when to begin social security are, for the most part, irrevocable hence they need to be carefully evaluated.

    6. Health Insurance 

      Health insurance is an important consideration, especially if you’re retiring prior to Medicare eligibility.

    7. Extended Care 

      Extended care is probably the area of most financial vulnerability for retirees, especially those who have at least a moderate amount of savings and investments.  The reason is that these investments would need to be spent down substantially should one of the spouses require long-term care.  If you’re insurable, this expense can be protected with long-term care insurance or with a combination of insurance and a degree of self-insurance.

    8. Charitable Giving 

      I’m treating this separately from estate planning as continuing to practice giving is important to many in retirement.  There are some creative strategies to maximize giving, especially from a tax standpoint (see the “Tax and Creative Strategies” tab on

    9. Estate Planning 

      This is a good time to review your beneficiary designations as well as your estate planning documents.

    10. Income Planning 

      Developing an income strategy is a coordinated endeavor, which takes into consideration your income goal, maximizing social security, minimizing taxes, picking the best pension option, factoring in your risk tolerance and deciding which investments to use.

Personal Note: 

I’ve helped many people in this transition.  It is truly significant event in which careful planning up front will pay off handsomely for years to come.  Furthermore, there’s no way to measure the psychological satisfaction in knowing that you have a solid financial foundation for this exciting new venture in life. 

I would like to offer you a complimentary (no obligation) overview to see if your retirement income goal is realistic.  To do so, complete the “Have a Question” box on the side of this page.