We go through life, essentially, learning the entire way. It seems that when it comes time to tackle our retirement planning, we often fall short in educating ourselves or reaching out to fellow mentors about the right choices to make. This can be a costly mistake for retirees.
.
We see it more often than we’d like here at the Retirement Guys Resource Center — smart, well-educated individuals who have made vital retirement decisions without taking the time to learn about their different planning options. At retirement, an employee is often handed the biggest check of their lifetime in the form of a pension and a 401(k). Smart decisions have to be made with those accounts so the income lasts as long as needed.
For all these years, the employee relied on the company for a steady paycheck. At retirement, most companies say, “Here are the choices on the pensions and the 401(k) plan. Let us know what you want to do.” Those decisions on how to best manage the money to have a lifetime of income can become overwhelming and at times are made without a lot of prior planning. Don’t make that mistake; here are three tips to follow.
- Know what is important. A lot should be considered before any retiree makes a decision. Remember, most decisions — like pension payouts — are irrevocable. So once the decision is made, it cannot be changed. Get it right the first time. Start by writing down what is important. Think about what you want to do, where you want to be and how much income you are going to need. Write down all of your dreams, goals, and desires. Just start on a yellow pad of paper and write down anything that comes to mind.
- Run the numbers. Once you know what is important to you and your dreams, goals and desires are written down, it is time to run the numbers. Is paying off the mortgage a possibility? Do you have enough money to buy a new car or second home? How long will your money last? What do the numbers look like when other options are considered? Running the numbers will not only help a retiree understand what is realistic and possible, but it will also help the retiree begin to prioritize the list.
- Map out a game plan. Anyone who has met me knows I am big into checklists. I like checklists because they can give an investor a road map to follow and also allow an individual to write in dates and deadlines. Moving into retirement is a new phase for a lot of people, so creating a retirement checklist is a great idea. Financial items on the list should include things like an inventory of all assets, a listing of income sources and an overview of the amount of risk in each account. This list should also include any dreams, goals and desires that, after the numbers were run, are still part of the plan.
- Retirement planning might seem a bit overwhelming at first. Remember, the best decisions for a co-worker or a friend may not be the best decisions for your family. No one decision is best for everyone.
For more information about The Retirement Guys, tune in every Saturday at 1 p.m. on 1370 WSPD or visit www.retirementguysnetwork.com. Securities and Investment Advisory Services are offered through NEXT Financial Group Inc., Member FINRA / SIPC. NEXT Financial Group, Inc. does not provide tax or legal advice. The Retirement Guys are not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537. (419) 842-0550.
