When is the best time to start planning for retirement? Yesterday – no matter the age. Of course, that is the ideal scenario. I stress the idea because most people don’t start really thinking about it until much further out.
Between 5 and 10 years is a very important time period to be doing some planning if you haven’t already started earlier. So I wanted to put a list together of the important items to start considering if you find yourself late to the game.
1. Put together an income plan
This important step is to figure out what you will need expense-wise per month and what income you will have at retirement to offset that need.
Age you want to retire
The monthly dollar amount you will need in future inflated dollars at that retirement age
Social Security strategy – basically how much and when you and your spouse will receive payment
Learn the details of any other pension plans or annuity plans that will create income
2. Investment Growth Plan to Fill the Gap
If you have enough future income to take care of the need, then the rest of this is pretty easy. If you are like most people who have a shortfall, then figure out how much you need accumulated in retirement savings to fill that gap.
Find out how much you have accumulated for retirement in investments
Determine a plan to get assets all into one strategy/gameplan – consolidate your accounts
Find out how much you will need to accumulate between now and retirement to make it work
Determine your risk level, which will dictate the investment strategy (how much to save, rate of growth, and risk strategy to protect.)
3. Miscellaneous but important
There are a few items that are important and sometimes forgotten.
Determine how much in a cash account you want to accumulate AND maintain
Determine if it is possible to be debt free at retirement and how you are going to get there
Determine any need for life insurance and long-term care insurance – very important
Make sure your estate planning (wills and trusts) reflects your current values and goals
The 3-step game plan is pretty general. However, this will give you and your financial advisor a roadmap to put a solid plan in place. Most advisors have their own way of going about this process. This is just in case you miss something in their process.
Listen to Bob on the Prudent Money Radio show. You can stream his daily show on all major podcast platforms like Apple Podcasts and Spotify
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