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Take These Financial Steps to Prepare for Your Post-Retirement Life

Four Ways to Level Up Your Retirement Readiness

Planning for retirement can feel overwhelming, especially if you happen to be getting a late start. However, it is essential to prepare your finances for retirement, especially as you enter your fifties and sixties, and have more clarity on what you want out of this next phase of your life. Use the three steps below as a roadmap to get started, or to help ensure your current retirement plan covers these essential areas.

Why Planning Matters

Before we dive into the recommended planning steps to take, let’s get clear about the importance of having a plan – and not just a one-size-fits-all plan, but one that serves you and your unique needs and values. If you haven’t focused enough on your retirement plan just yet, consider some alarming data from Nationwide. It suggests that your money is quite vulnerable in the first decade of your retirement and that any overspending that occurs in those years is very hard to come back from. How do you help to protect yourself from this fate? Well, the answer is by planning ahead.  Enjoying a retirement free from financial stress requires forethought.

Step 1: Create a Budget

If you’re of the mindset that having a budget is only useful as you’re working and saving for retirement, think again. Retirees need to create a realistic budget to live by in order to ensure they don’t overspend and risk outliving their nest egg. Determine what your monthly spending will look like, including essentials like paying bills and buying groceries, then add in nonessentials like streaming services and gym memberships. Consider, too, any significant one-time expenses, like that cruise you’ve been dreaming of, and where those funds will come from.

Ideally, your budget will leave you with some wiggle room that allows you to tackle goals like assisting your grandchildren with college expenses or buying a vacation home, too. Take all of these factors into account when you’re creating your budget so that you can take care of your necessary expenses while also accomplishing your short-term and long-term goals – and not having to worry about outliving your money.

Step 2: Think About Your Legacy

If you desire to leave a financial legacy behind for your heirs, planning is key. You need to determine not only your goals, but also your strategies to accomplish them. For instance, if you have a goal to help each of your four grandchildren purchase their first homes, think about the best way to accomplish that. You could set money aside in a trust to be accessed after you pass away, or you might consider gifting them money while you’re still alive. (You can gift up to $16,000 each year to a child or grandchild without being taxed, so this is a great strategy for some people!)

A word of caution: While it’s admirable to want to offer financial assistance to your family members, try not to do so at your own expense. Gifting too much of your nest egg, especially when you’re on a fixed income, could put your own retirement and healthcare needs at risk as you age. So, make sure you understand the implications of consistent gifting to your children or grandchildren. You don’t want to put yourself in a situation where you’re asking for money back later in life to provide for your care.

Step 3: Consider Your Aging Parents

Many people find themselves taking on the role of caring for one or more aging parents in retirement, and it’s important to create a plan around it. Communicate with your parents and make sure you understand any streams of income they may have so that you can coordinate them with your own income and create a comprehensive plan that considers their resources and yours, as well as their needs and yours.

Even if you’re not caring for aging parents yet, communicating about the future is key. In fact, discussing these matters and creating a plan together is easier to do while everyone is still in good health. Since these conversations can be difficult – and even emotionally charged – it’s often helpful to have a financial advisor present to facilitate in an unbiased way. Having such discussions early on can protect your parents from financial mismanagement as they age – and prevent you from having additional financial stress or surprises once you’ve retired.

Do You Need a Financial Advisor to Help Prepare Your Finances for Retirement?

People planning for retirement fall all across the financial knowledge spectrum. It may be that you’re a savvy investor and have enjoyed building your personal finance know-how, or you might be on the opposite end and feel overwhelmed and confused by all your planning options. Either way, partnering with a financial advisor you trust can be invaluable. Look for a fiduciary who is legally obligated to protect your best interests and interview several advisors before selecting the one that feels like the right fit for you. A professional can review your existing financial plan, determine whether you’re taking the right amount of risk in your investment portfolio, and help you plan your retirement income streams. They can even work in tandem with your CPA and estate attorney to help ensure all facets of your financial plan are coordinated.

At Paces Ferry, we offer experience and vision to guide you along the way to accomplish your financial and life goals. We succeed when our clients are happy, secure, and on the path to financial freedom. If you’d like to schedule a no-obligation conversation about your financial plan for retirement, please contact us today. We look forward to hearing from you!

Paces Ferry Wealth Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”).  This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.