Reap Your Reward.
You’ve finally arrived. All your years of hard work and sacrifice have paid-off and you’re ready to enjoy retirement. But now, even though you have the time to travel more, start a new hobby, volunteer, or even go back to school; you also have to take the time to re-evaluate your financial picture and plan for the rest of your life. You’ll quickly learn retirement is not a destination – it truly is a journey.
Plan how you’ll draw on your retirement funds.
- Meet with an investment or wealth management professional to determine which approach to drawing on your retirement funds is best for you. A good but general rule of thumb is to draw from Social Security first, then from taxable investment accounts, and last from IRAs and other tax-deferred plans.
Rethink your investment plan and portfolio.
Even though you’ve begun to tap into your retirement nest egg, you will still need that money to grow for 20-30 years or more. Take that into account with a need for more stability and security in your investment returns, you’ll likely need to shuffle your holdings.
Construct a ‘retirement living’ budget.
- Track your spending for 2 or 3 months. Analyze to make sure you’ve accounted for all reasonable expenses including the more indulgent (and well deserved ones) like travel and recreation.
- Establish and live by a monthly budget that allows you live comfortably, draw on your retirement assets prudently, and minimize your tax liabilities.
Review your insurance policies.
- If you’ve got a term life insurance policy or policies, it may be time to cancel. The premiums don’t create any cash value and you’ve likely got enough retirement assets to take care of your spouse and cover final expenses.
- Evaluate existing whole, variable and universal life insurance policies. Depending on your investment position and needs, you can:
- Continue to pay the premiums and let the policy grow as a tax-deferred investment.
- Convert the plan to an annuity that pays you a guaranteed monthly premium for life (and usually for the life of your spouse, as well).
- Cash in your policy for the stated value
- Investigate long-term care for you and your spouse. A policy of this nature can help defray costs and help save your nest egg should you or your spouse require nursing home or assisted living care.
Plan your estate.
- Consult with a trustworthy attorney, tax professional, and financial advisor to construct a plan that ensures everything you’ve worked so hard for is passed along according to your wishes.
- Update your will accordingly. Continue to review and update the document as your life changes and to reflect updates in estate and tax laws.
- Consider a living will. Drafting one now may save a lot of heartache and discord for your family if faced with a grave medical decision.
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