Getting Financially Ready for Retirement

How long has it been since you took a good look at your financial situation?  I have found a good exercise each year is to take out your “yellow pad” and make a list of all your assets and liabilities.  Although this may not tell you how close you are to being ready to retire, it provides a good snapshot of your overall situation.

When doing this you may notice accounts that need attention, investments that may be suffering, or debt that may need the “aggressive touch” to pay off.  Peek into each of your investment statements and see if you notice too much money sitting in a money market or cash position earning nothing.  While interest rates are still very low ask yourself if your mortgage needs refinancing.

As you plot out necessary changes to make, remember the old adage, “You can’t eat an elephant in one bite!”  So make some gradual changes like increasing your monthly 401(k) or IRA contribution, increasing your monthly payment on a debt you owe, reallocating your investment portfolio to be more effective, or simply realizing that you need “help” and make an appointment with a Certified Financial Planner™.

Your Spouse’s Retirement & Social Security

Let’s assume for a moment that you are now gone and your surviving spouse must account for all the income she will receive.  A common mistake today is if you just assume that your surviving spouse will continue to receive “both” Social Security checks just like during your retirement.  However, this is not correct.  Your spouse will only receive “one” check from Social Security.  In other words, the total Social Security income will be reduced and a good rule of thumb is that your spouse can receive the larger check the two of you had been receiving.

Needing Retirement Income?

Many pre-retirees are concerned and wondering if they will have enough retirement income when they retire.  So how can they begin to improve their situation?

A simple and excellent strategy is to have all debt paid off by the time of retirement.  For many people this can be at least $1,000 to $1,500 per month of cash flow improvement.   And one of the best ways to possibly accomplish this is to begin years before retirement paying more each month towards your debt.  This can allow you to eliminate your debt much faster with the goal of paying it all off before your reach your retirement date.  In addition, you may also receive an intangible benefit… the great feeling that you owe no one, and the freedom that comes with this.