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A Great Retirement Requires a Plan


The American dream of retirement is having the time to pursue the interests and activities that you love while still healthy to do so, spending quality time with beloved family members and experiencing the freedom of financial security. This is not something that happens by luck: most people have to work hard at planning to achieve these retirement goals. It’s not something you can do by the seat of your pants, according to a recent Kiplinger article “Americans Need to Stop Winging It with Their Retirements”

Solid retirement planning is more sophisticated than just putting a few dollars into an individual retirement account or 401(k). Saving money is very important if you want to accomplish your retirement goals. However, if you want to keep as much as you can, saving money is just one part of a retirement plan.

If you are five to ten years away from retirement, consider these reminders to help you keep on track when working to meet your retirement goals:

Calculate if you'll have enough money to cover your expenses. Look at your income when you retire—like Social Security, pensions or rental income. Then calculate what your approximate monthly expenses will be. If you have more monthly expenses than monthly income, you’ll need to work to close that gap. Without enough income, there’s really no retirement.

Remember taxes and inflation. Unless your assets are in a Roth IRA, when you start withdrawing your money from other sources, there will be taxes. In addition, inflation can melt away some of your spending power. Take taxes and inflation into account.

Watch market volatility in your investment portfolio. As you get close to retirement, it's important to look at your risk tolerance when allocating your retirement assets. If you're younger, you can recover from a downturn in the market; however, if you're 60, you will have less time and more difficulty recovering from a major loss.

Develop an estate plan. An estate plan is more than just a will and a power of attorney document. By sitting down with an estate planning attorney, you and your partner will be able to develop the legal documents necessary to protect those you love. That includes protection for your spouse as well as protection and transfer of wealth for the next generation. The attorney will be able to guide you through various tax strategies and ensure that your wishes are achieved.

Reference: Kiplinger (July 2016) “Americans Need to Stop Winging It with Their Retirements”

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