5 Things to Do When You Are Getting Close to Retirement

5 Things to Do When You Are Getting Close to Retirement

Close to Retiring?

Congratulations! You are almost to retirement. As you move from thinking about building your retirement income to using it, here are 5 steps to prepare you for this new phase.

1. Review Your Financial Situation

If you haven’t done so already, create a retirement budget to get a better idea of the amount of money you will need each month.

Take a look at your retirement account(s) to determine if you have accumulated enough to cover those expenses. If you have, congratulations! If not, there are a few options you can consider such as: planning to retire at a later age or increasing contributions to your account (if your contributions are already at the maximum allowed by your plan, explore catch-up contributions ).

2. Know Your Options

You have some options  for what to do with your retirement account when you retire. Such options include:

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

3. Evaluate Your Investment Mix

Continue to invest, and review your investment mix  with your financial professional to help determine if it’s appropriate for you. Investments should be conservative enough to preserve your income during retirement and aggressive enough to stay ahead of inflation.

4. Determine Your Withdrawal Strategy

It is important to determine a retirement income withdrawal plan because you may be drawing retirement income for decades, and if you spend too much in early years you risk short changing yourself later. 

There are a couple rules to keep in mind regarding how and when you can 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.

When it is time to take distributions, financial professionals generally recommend that you withdraw from taxable accounts before tax-deferred accounts (such as your employer-sponsored retirement plan). 

5. Consider Your Legacy

If you haven’t already, it is a good time to create an estate plan with your attorney. This plan should take into account all of your assets (including investments, retirement accounts, insurance policies and real estate) and communicate who will carry on your legacy and how.

Log in to your account to take stock of your retirement savings. As you start to make plans for retirement, discuss these options with a financial professional.

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