The financial and emotional sides of the retirement equation are inextricably linked. For example, financial projections may show you’ll run out of money at age 90—and you might be comfortable with that if your priority is to enjoy life today. In contrast, you may never want to take the chance of your money running out. Perhaps you saw your parents or in-laws experience a similar situation and it impacted your worldview. Regardless, when it comes to retirement, it’s easy to see how finances and emotions are tied together.
In this blog post, we’ll discuss retirement readiness in more depth, and explore how your Curio Wealth advisor can help you plan for your golden years.
Time for a catch-up on your finances? Schedule a call with your Curio Wealth advisor today.
Financial And Emotional Retirement Readiness
Being financially ready to retire means you have enough assets and/or income streams to support your future lifestyle once you’re no longer working. Getting to this stage requires thinking carefully about what you want your life to look like in retirement, and estimating what that might cost. For the latter part of the process, your Curio Wealth advisor can lend a hand.
Being emotionally ready to retire looks different for everyone. In some situations, folks are wiped out from work, stressed, or facing other health issues that cause them to realize it’s time to stop working and to focus on themselves. In other instances, people’s careers naturally wind down, especially if they’re working to earn a paycheck, rather than working for a purpose they feel passionate about.
Sometimes, an individual or couple might be financially ready to retire, but not emotionally ready. They may have Social Security and a pension that would cover all their spending needs, or even millions of dollars in investments, but they’re still worried about whether they’ll be able to make ends meet. Alternatively, some folks are so attached to their careers that they can’t imagine retiring. The process of getting ready to retire looks different for everyone depending on these financial and emotional factors, and the way they interplay.
Preparing For Retirement: 3 Key Steps
As a Curio Wealth client, we can help you arrive at the right decision for you. If you come to us and say you’re ready to stop working, here’s what we’ll do to help you get ready to make the transition:
1. Start With Today
We’ll start by assessing your current standard of living, and whether you’d be happy with that same lifestyle in retirement. You may be content with your life today, but looking to travel more in your golden years. This is important to consider.
2. Plan For The Future
Next, we’ll confirm which income sources you’ll have to support your desired lifestyle in retirement—for example, Social Security or a pension. If those aren’t going to be enough, we’ll look at how we can supplement your income with other assets.
The key is to figure the shortfall (if one exists) and make sure you have enough money to fund your lifestyle. This includes thinking about whether you plan to move or buy a new house, and any medical considerations that we need to take into account.
In addition, we’ll likely start shifting your investment portfolio to a more conservative asset allocation so your investment return matches your income needs and you can more confidently rely on its returns when you stop working. A shift should take place well before your actual retirement day, as you wouldn’t want to go into retirement with a portfolio that is too risky and experience a market correction.
3. Optimize Your Taxes
Then, we’ll help you figure out which accounts to pull money from in the most tax-efficient way both before and after you retire.
It’s crucial to recognize that tax rates change significantly when you stop working. The years between ages 65 and 72, when you must take required minimum distributions from your retirement accounts may be low tax years that we can help you take advantage of. We may also recommend doing Roth conversions during that time.
We can help you decide when is a good time to retire.
Good communication is key to a positive, productive relationship with your Curio Wealth advisor. We’ll reach out to you regularly, but we also encourage you to stay in touch with us and give us lots of lead time to help you prepare for retirement. We know that life circumstances change over the years, and we’re always here to help—with both the financial and emotional aspects of retirement.
We encourage you to reach out to your advisor whenever you’d like to talk, and in the meantime, listen to our recent podcast episode on retirement.
