5 Ways to Prepare for Retirement

5 Ways to Prepare for Retirement

Prepare for Retirement

As you move from thinking about building your retirement income strategy and closer toward using it, there are five ways to prepare yourself for this new phase in your life.

1. Review Your Financial Situation

  • If you haven’t done so already, create a retirement budget to determine the amount you will need to live on each month in retirement.
  • Take a look at your retirement account to see if you have accumulated enough to cover those expenses. If not, there's still time. Contact your financial professional to discuss what you can do to get closer to your goal.

2. Know Your Options

You have several options for what to do with your retirement account when you retire.

  • Roll over into a Traditional IRA
  • Purchase an annuity
  • Keep assets in the retirement plan
  • Take a lump sum
  • Begin taking distributions

3. Think About How You Will Invest

Continue to invest and review your investment mix to make sure it's still appropriate for you. Investments need to be conservative enough to preserve your income during retirement but aggressive enough to stay ahead of inflation and grow your investments over time. Find out what your investment style is using our Asset Allocation Calculator.

4. Determine Your Withdrawal Strategy

It is important to have a retirement income withdrawal plan because you may be drawing retirement income for decades.

Here are a few things to keep in mind when determining how and when to access your retirement account:

  • At age 59½, you can start withdrawing money from your employer-sponsored plan without penalty.
  • The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law on December 20, 2019, and changed the required beginning age for RMDs from 70½ to 72. Individuals born on or after July 1, 1949, must take their first RMD by April 1 of the year following the year in which they turn 72 and by December 31 each year thereafter. Individuals born prior to July 1, 1949, must take their first RMD by April 1 of the year following the year in which they turn 701/2 and then by December 31 each year thereafter.
  • You might want to withdraw from taxable accounts before tax-deferred accounts.

5. Consider Your Legacy

Pre-retirement is a good time to create an estate plan with your attorney.  You'll want to take into account all of your assets (including investments, retirement accounts, insurance policies and real estate) in determining your financial legacy. to take stock of your retirement account and discuss your options with a financial professional.

Please visit our One Day Is Today section. We've created these pages to help you get more information and tools so that you may fully enjoy retirement.

NOTES: Please note that the use of asset allocation or diversification does not assure a profit or guarantee against a loss. Provided content is for overview and informational purposes only and is not intended as tax, legal, fiduciary, or investment advice. 

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