Whether you are years away from retirement or already planning for life after work, there are some steps you need to take. Planning for retirement is like planning for the longest – and most expensive – vacation of your life. If you do not take the proper steps now, you could end up going back to work later.
Whether you are seeking investment strategies for retirement in Sun City AZ or trying to determine how much you will need to live on when you stop working, it is important to prepare carefully. Here are some of the steps you should be taking.
Create a Post Retirement Budget
If you have not yet created a post retirement budget, now is the time to do so. You can start by reviewing how much you currently spend now. From there you can adjust the figures according to which expenses will go up and which ones will go down.
Certain expenses, like the cost of commuting and buying work clothes, will go down or go away after retirement, but other costs are likely to go up. If your retirement plan at work does not include health insurance, you will need to budget for that significant expense. If you plan to pursue a hobby, those costs might go up as well. Your retirement budget does not have to be perfect, but it should reflect what you expect to spend in your first few years.
Meet With a Financial Planner
Even if you have been doing your own saving and investments until now, it is a good idea to meet with a financial planner as you get ready for retirement. A good fee-only financial planner can help make sure you are on the right path and that you have saved enough to stop working.
You will need to rely on the next egg you have accumulated to provide a stream of post-retirement income, so meeting with a financial planner who can guide you is a smart move. Just be sure to check out the history of your broker and make sure they do not have any complaints or past infractions to their name.
Adjust Your Investment Portfolio
If you have been saving aggressively for retirement all these years, you may have most or even all of your money in the stock market. After all, stocks can provide superior long-term growth and offer a better chance of reaching your goals.
As you transition to retirement, however, it is important to reduce your risk, and that means rebalancing your portfolio. Many new retirees like to keep a balanced portfolio consisting of 50-60% stocks and 40-50% fixed income instruments like bonds and certificates of deposit. Now is the time to start transitioning and taking some money off the table.
These steps can help you create a secure retirement for yourself and your family. You spent the last couple of decades building a nest egg and getting ready for this new part of your life. Now is the time to enjoy it.