What You Should Keep In Mind During The Five Years Before You Retire
As you approach retirement age, it can be an exciting time. But it can also be a somewhat stressful time as you transition from working and earning an income to relying on investment income and other retirement savings.
Having a bit of concern at this time is not only normal, but it’s also a good thing.
The 5 years before retirement can be a crucial time to make final adjustments to your retirement strategy that can pay off for years to come.
In this article, we’ll look at the key things you should focus on in the 5 years before retirement to make sure your retirement strategy is on track.
Be More Precise With Your Retirement Spending Projections
When you are decades out from retirement, it may be difficult to exactly calculate how much you’ll need per month to maintain your lifestyle when retired.
However, 5 years before retirement, you can clearly see how much you will need to maintain your lifestyle.
Perhaps you’ve decided you need less as you reevaluate what’s important to you. On the other hand, you may realize you need a little more due to personal plans or economic conditions.
Use this time to firmly nail down your financial needs to maintain the lifestyle you want and make adjustments based on those goals.
Take Inventory Of Your Retirement Income
At this stage of your retirement planning, it should also be much easier to calculate exactly how much you’ll be receiving when you retire.
You should know what age you plan on taking Social Security along with how much various other investment products will be paying you.
Use this number to compare it to what you determined in the first step and see where you stand.
Don’t Forget About Required Minimum Distributions
Required minimum distributions or RMDs are rules regarding required withdrawals from retirement accounts based on age.
This means you’ll have to take money out and that money will be taxed. It also means that money will not be growing as it was before.
This begins at age 72, but you should calculate these mandatory withdrawals as well as their tax implications as you approach retirement age.
Be Honest About Your Lifestyle Needs
This is also a time to be honest about what you truly need to be happy in retirement. This is different for everybody, so there is no correct answer or guide here.
But what is important is that you be honest with yourself and what you will need. Don’t underestimate or overestimate in this regard as both can have consequences both financially as well as for your happiness.ICCNV is an innovative advisory firm full of experienced wealth management experts who are dedicated to helping clients achieve their retirement goals and aspirations so they can live the lifestyle they want.