Happy 2024. My first blog of the New Year is going to be on a topic that I deal with a lot in my business. Helping people plan for retirement. Some questions I get asked frequently are:
- Do I have enough assets to retire?
- Are my assets in the right place?
- Which assets do I use first?
Let’s try to address these questions. First, you need to look at what your expenses are. Take into account housing, healthcare, travel, and leisure activities. Determine the number of years you expect to be in retirement. Then analyze your resources. Estimate your income from sources such as social security, pensions, and other retirement accounts. It is also important to consider tax implications of your different accounts. Making sure your assets are properly diversified are important too. During your younger years you can be more aggressive but as you age you need to shift to a more conservative approach. Here is what a Financial Planner can help you do: access your risk tolerance, time horizon and retirement spending needs. Keep in mind you need to sometimes review and rebalance your portfolio as needed.
Finally, it is advisable to withdrawal from the taxable accounts first. This includes checking, savings and standard brokerage accounts. By using these funds first, you allow your tax advantage accounts such as IRA’s and Roth IRA’s more time to grow and compound. Retirement is often look at as an end to a big part of your life, but it is also a fresh chapter to explore, so ensure your financial road map aligns with your retirement dreams.