I know that retirement is just around the corner for many of my regular listeners and readers, and for many of our clients at Keen Wealth. In fact, some of you may have started 2019 with a resolution to make this your last year of full-time work. Once you’ve decided to retire and that reality starts to sink in, the scope of this life change can be daunting.
Well, we’ve got you covered with this special episode of Keen on Retirement. I went back into past podcasts and blog posts to put together a primer on five ways you can prepare to “retire right” and smooth your transition into retirement. And for those of you that are already retired, this episode will be a nice checklist for things to review and consider along your journey in retirement.
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Your “Retire Right” Checklist
1. Determine how much money you need to live on in retirement.
So, “How much money do I need to retire?”
There’s really no one-size fits-all answer to that question. No two retirements are going to be exactly alike, so no two people are going to have the same financial needs in retirement.
At Keen Wealth, we prefer to help our clients arrive at a clear understanding of how much income they need to retire comfortably so they don’t worry about running out of money.
To make sure you’re financially ready to retire, start with these 4 items:
- Make a budget. Once you switch from living off a salary to living off your savings and investments, budgeting is going to be critical to your peace of mind.
- Pay down your debts. Specifically, any credit cards or vehicle loans that carry high interest. If you have a mortgage you want to pay down before retirement, that can be beneficial too. But including fixed-rate mortgage payments in your retirement budget can make sense as well.
- Sync your preferred retirement age, retirement accounts, and plan for taking Social Security. You need to make sure you won’t be penalized for withdrawing from your retirement accounts if you retire early. In a good portion of the cases it may be best to delay taking Social Security as long as possible to maximize your benefit.
- Prepare to transition to Medicare. Once you stop receiving employer-subsidized healthcare, you and your spouse are both going to need individual coverage. That means Medicare if you’re both over age 65 or could possibly also mean buying coverage off the marketplace if one of you is younger.
2. Live your best life possible with the money you have.
If you’re too focused on “how much money is enough,” you’ll never have enough. We want our clients to understand that money is not an end, it’s a tool you can use to improve your life.
Recently I sat down with a gentleman who had been referred to Keen Wealth for help with retirement planning. This guy was a 40-year veteran of the banking industry – he’d even spent some time working at the Federal Reserve. He knew finance inside and out, and he was pretty confident that, money wise, he was on track to retire.
So why did he want to talk to a fiduciary advisor? Because he knew that a successful retirement wasn’t just about return on investment. He wanted to know how he could get a better Return on Life from his assets. He wanted to hear about the strategies our clients have used to ease away from working and into living the best life possible with their money.
A good first step in this process is to go to KeenonRetirement.com and take the free ROL Index assessment. These 20 questions will get you thinking about how you’re using your money to improve your life in three key areas: well-being, progress, and freedom.
3. Lock down your estate planning basics.
I know it’s not fun to think about life without you in it. But if you don’t have an estate plan in place when you or your spouse pass, the state in which you reside will settle your estate according to local law. This is not the way you want your affairs to be managed.
- A Will that outlines your last wishes and explains how you want your estate to be distributed.
- A Power of Attorney that authorizes someone you trust to act on your behalf in the event that you are incapacitated or unable to make decisions.
- A Healthcare Directive dictating how you would like to be cared for in the event that you become incapacitated.
- A Living Will designating a person to be in charge of making important medical choices on your behalf if you are unable to.
- Beneficiary Designations on life insurance policies and retirement accounts should be reviewed and confirmed that they are correct and using POD’s or TOD’s on bank and brokerage accounts and other assets can be an option as well.
If you need help putting any of these documents together, or if you’re considering creating a living trust, we can connect you with legal professionals who would be able to assist you.
4. Keep market fluctuations in perspective.
I’m sure you’re aware that last year was a bit of a roller coaster for the markets, and there were some volatility spikes that made folks nervous, especially new and soon-to-be retirees.
But one key point that we’ve returned to time and time again on this podcast is that volatility is normal. Our strategy of diversification, strategic rebalancing, and a five-year reserve in fixed income is a pretty dependable way to maintain a consistent income during volatile periods while also providing a cushion for any emergencies. But the specifics of how those assets are allocated and which levers to pull when, will depend on your financial situation and your retirement goals.
5. Make a new schedule.
The good news about your retirement compared to your parents’ or your grandparents’ retirement is that, knock on wood, it’s likely going to last longer. The advances in medicine, preventative care, nutrition, and exercise we enjoy today mean that people are living longer than they ever have.
The bad news is … you’re going to need to find more things to do!
Retirement is an ART: A for activity, R for relationships, and T for time. Figuring out what your ART is going to be, how you’re going to spend your time in retirement and who with, isn’t always as easy as it sounds. In fact, we tell clients to expect and even embrace some trial and error as they discover what’s going to make their retirement fulfilling.
Don’t be afraid to try some new things. Take lessons to fix your golf swing. Travel more. Make plans to visit friends and grandkids more often. Focus on your hobbies. Write that book, paint that masterpiece. Volunteer, work part-time, or start your own dream company, with you as the boss.
6. Contact Keen Wealth!
OK, this isn’t an official item on my “retire right” checklist. But when it comes to financial planning, working with fiduciary advisors can add value and may help create real peace of mind for you. If this is the year your retirement becomes a reality, or if you’re already retired and want to make sure your plan is on track, let’s talk about how we can help make this process as smooth as possible.
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Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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