Steps To Take To Prepare For Retirement

By Daniella Rand

Many investors believe themselves to be prepared for retirement. Unfortunately, perceptions don’t always comport with reality.

If you have yet to take any of the steps described below, your retirement plan is not as strong as it could be. This is not meant to be a criticism, merely a statement of fact — one that’s easily rectified by taking concrete retirement preparation actions today.

Daniella Rand

1. Consult a Financial Advisor

Begin by consulting a seasoned financial advisor whose process is aligned with your long-term goals and whose track record of outperformance speaks for itself. This step will take some time, but it’s important to get it just right, as the rest of your retirement planning process will depend on a successful outcome here.

2. Develop a Thorough Retirement Plan That Incorporates Your Unique Needs and Goals

Work with your financial advisor to put together a retirement plan customized for your family’s needs, objectives, and tolerance for investing risk. Your retirement plan should not resemble anyone else’s — that’s the whole point of a bespoke package.

3. Complete the Estate Planning Process

Consult an estate planning attorney to draw up your will, advanced medical directive, power of attorney designation, and trust documents. Properly planning your estate is essential to the smooth transition of asset ownership after your death — a valuable measure of peace of mind for you and your heirs.

4. Understand How to Ensure Adequate Income in Retirement

Speak with your financial advisor about ensuring adequate income in retirement. Your goal must be to preserve the lifestyle to which you’ve become accustomed while ensuring that you are providing for your dependents (and future heirs) during and after your life.  Keep in mind that many people spend more in retirement than they do in their working years.  

5. Get Your Household’s Spending Under Control

Follow the golden rule of personal finance: Don’t outspend your income. In consultation with your financial advisor, take whatever measures are necessary to rein in your spending and create a solid financial foundation.

6. Maximize Contributions to Your Tax-Advantaged Retirement Accounts

Maximize your tax-deductible contributions to your employer-sponsored retirement plan and Individual Retirement Account(s). This will reduce your income tax burden while putting more of your money to work for your retirement plan.

7. Use Other Tax-Advantaged Accounts to Your Benefit

Use health savings accounts, education savings accounts, and other appropriate tax-advantaged accounts to shield more of your money from income taxes and increase your net worth.

8. Add Further Layers of Financial Protection for Your Family

Speak with your financial advisor about life insurance, annuities, disability insurance, and other important forms of financial protection. Your family’s financial security may depend on them.

Are You Prepared for Retirement?

Are you well and truly prepared for retirement?

If you haven’t taken the eight steps outlined above, along with many others not mentioned here, your position may be weaker than advisable. You have a duty to yourself and your family to act with deliberate haste to shore up your financial position and give your retirement plan every opportunity to succeed.

That might not sound like your idea of a great time. But the most important move you can make to ensure that you and your loved ones have plenty of “great times” ahead, without the needless worry that comes with financial ill-preparation.