Ready, Set, Retire!

Are you getting close to retirement age?  Have you started daydreaming about long, lazy days in the sun without a hectic schedule filling every minute?  Then perhaps it’s time to do something about that wishful thinking and take some concrete action to make a smooth transition to retired life.
Ready, Set, Retire! - Parsec Financial - Retirement Planning

Several years in advance of your actual retirement, you can take some retirement readiness steps to prepare and allow yourself to enjoy this milestone without the anxiety of the unknown. So grab the sunscreen and take a bit of a retirement test drive.

1. Create a post-retirement budget and give it a trial run.

While it is true that some of your current expenses will be less in retirement, putting pencil to paper will give you a better idea of the true difference. Creating a retirement budget and living with it may encourage you to set aside more money, alter the age you plan to retire and prevent any surprises. Also, if you have a travel bucket list, a budget will help make sure your plans align with your retirement income.

2. Pay down debt and reduce living expenses.

Pay off your highest-interest rate debt first, usually credit cards followed by car loans. If you have a mortgage, talk to your financial advisor to determine if it should be paid off pre-retirement or if there are refinancing options. You may not qualify for refinancing after retirement due to reduced income.  Other options to consider are downsizing to a less expensive and easier-to-maintain home or moving to a less expensive state.

3. Revisit your insurance needs.

Term life insurance is expensive when you get older, and it may no longer be necessary for income replacement when you are retired. You may, however, want to investigate long-term care insurance, which is less expensive to purchase in your 50s than if you wait until later.

4. Develop a Social Security strategy.

Start educating yourself about Social Security at the Social Security Administration’s website.  Use the online tools to determine your estimated benefit amount and understand when to start claiming. These decisions can be complicated depending on your life circumstances, and it may be a good topic of conversation for you and your financial advisor. Read our related article, “How Social Security Fits Into Your Retirement Plan.”

5. Evaluate your health insurance options.

If you plan to retire early, will you need an individual health insurance policy until you turn 65? When Medicare begins, will you purchase a supplemental policy? What would it cost?

6. Reevaluate your asset allocation.

Is your allocation of equities to fixed income still appropriate or is it time to start shifting some assets? Read my colleague Travis Boyer’s article “Adjusting Your Portfolio Allocation Ahead Of Retirement.” Do you need additional liquid assets to cover moving expenses or home repairs?   Would consolidating retirement accounts make life less complicated and do you understand which accounts will require a yearly required minimum distribution (RMD)?

7. Consider how you will spend your time.

Think about how you want to use that hard-earned free time. Do you plan to work part-time at something you enjoy or volunteer? Prior to retirement, try a few of the options you’re considering; start building skills and a network of contacts. Staying involved is good for your health as well as your pocketbook and it prevents you from spending money out of boredom. Retail therapy may not be the best retirement plan for you!

8. Seek help from your financial advisor and CPA.

It requires careful financial planning and tax planning expertise to determine how much to draw from your retirement savings each year so that they last for your lifetime and which account — taxable or nontaxable — is best to use for distributions. This is why you have a Parsec team. Don’t wait until you are already retired to have a planning conversation!

I hope this retirement readiness plan helps set you up for a successful and enjoyable retirement!

Nancy Blackman, CFP®
Senior Portfolio Manager


Recent Posts:

10 Ways to Celebrate Independence Day

I proudly served in the U.S. Army from 1991 to 1992 as a medic. My time serving makes me appreciate being a U.S. citizen. This holiday, I hope you do something enjoyable with family and friends. Here are ten ideas — I will likely do a mixture of them all!

Recent Quarterly Newsletters:

Thrive by Learning and Growing Edition

Read our Q2 2022 newsletter on how to thrive by learning and growing. CEO Rick Manske reflects on graduation season and what this time of achievement and change means for students and loved ones. CIO Bill Hansen writes about education savings; President Harli Palme writes about tax savings related to college expenses; Portfolio Manager Nancy Blackman cautions about hidden costs of college. Advisor Charles Thompson outlines why it’s important that we value and prioritize travel. Advisors Judd Meinhart and Hilary Daniel write about job transitions and what to do with your 401(k) and new benefits. Advisor Neal Nolan ends with 10 ways to celebrate Independence Day and we highlight announcements across our firm. We hope you enjoy this edition!

Thrive by Planning for the Unknown Edition

Our Q1 newsletter focuses on planning for the unknown. CEO Rick Manske begins with outlining the importance of implementing financial family fire drills. Sr. Financial Advisor Travis Boyer writes about handling risk and Director of Investment Management Sarah DerGarabedian discusses mindful investing and how according to Seinfeld, “Anything’s possible!” Financial Advisor Scott Kittrell outlines how to manage the increasing cost of health care, and Sr. Financial Advisor Michael Baughman covers how to determine if you need health insurance. Manager of Financial Planning Judson Meinhart provides helpful tables to fill out to determine if you have adequate property and casualty insurance. Co-Director of Tax Services Larry Harris writes about tax planning unknowns. We hope you find this edition insightful!

Recent Whitepapers:

Stay Up To Date With Parsec

Sign up to join our mailing list and receive quarterly newsletters, whitepapers, news, and more right in your inbox.