Less Than 5 Years from Retirement? 5 Steps to Take Now

| October 21, 2016

A frequent question that comes up with people I speak with and in emails I receive is this general question: “I’m going to retire in the next few years, what should I be doing now to make sure I’m ready?”  That’s the right question to be asking now, especially if you’ve been planning and saving for the last 3+ decades. So here you go, here’s the short-list I’ve come up with based on my career helping clients make this important transition:

  • Make sure your financial advisor is experienced in retirement income planning and distribution-phase portfolio management. His or her investment process should be clearly articulated to you in terms that you understand. If your advisor can’t explain the process, or tries to explain concepts through story-telling alone, it could be a sign they lack expertise in this particular area. Also, ask your advisor to show you the tools they use throughout the portfolio management process.
  • Review your asset allocation. The last thing you want to have happen is to be invested too aggressively right before you retire, only to have the market fall out from beneath you. Transition the portfolio’s allocation to your distribution-phase allocation about 2-5 years prior to retirement.
  • Update your estate plan. Chances are it’s been years if not decades since you’ve reviewed your estate documents. You may want to explore options beyond a basic will this time around – wills, trusts, health care directives and durable powers of attorney are among the documents many people use in their estate plans. To help sort out what is needed for your estate plan, seek out an attorney who specializes in estate planning.
  • Track your spending. Know what your current lifestyle costs you every month and then check your lifestyle cost against your resources. If tracking every single expenditure is too daunting for you, try this simple method to get a ballpark figure:

          Wages – Taxes – Savings (401k, IRA, Roth, etc) = Lifestyle Cost 

  • And finally, know your financial advisor’s retirement plan. You don’t want your advisor retiring right around the time you do, and so it’s fair to ask them about when they plan on retiring and what their succession plan looks like. If you’re not sure the successor is a person you are comfortable with, start interviewing other experienced fee-only financial advisors who will be with you for the long-haul.

Congratulations – retirement is officially on the horizon! Keep up the good work you’ve already done, tweak your plan by following the above 5 steps, and consider getting things checked out by a non-commissioned based financial advisor who will always act in your best interest.

About the author:Paul Wilson, a 15-year industry veteran, is a Financial Advisor at SDW Investment Advisors, a Minneapolis-based Fee-Only Registered Investment Advisor. Paul writes and speaks on issues related to the high-net worth community as well as a wide range of financial planning topics, with a focus on investor advocacy.  You can follow him on Twitter: @Wilson_Advisor or on LinkedIn.