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Pre-Retirement Planning

Pre-retirement planning is one way to help ensure that you're prepared for retirement when it comes. This process is all about preparing for the end of your career—so you can have more control over what comes next. And while this may seem like a daunting task, with the right guidance, you can make sense of the process and prepare for the future.

We recognize that each client's needs are unique and treat each individual with the personalized attention they deserve. With our extensive experience, we can help you plan for today, tomorrow, and years down the road.

Why Is Pre-retirement Planning Important?

Pre-retirement planning is crucial because it helps to minimize any unpleasant surprises at the end of your working life. You want to enjoy your retirement years—not find yourself suddenly scrambling for cash.

One important step is to be familiar with the requirements in your state so you know what to do before claiming your benefits. If nothing else, having a rough idea of what's involved will help make sure everything goes smoothly when you reach retirement age.

It's never too early or too late to start planning for your retirement, and the sooner you do it, the more prepared you'll be when the time comes. A professional financial advisor can guide you through this process.

What Does Pre Retirement Planning Entail?

Pre-retirement planning is an important step you should take to ensure a smooth transition from your working years to retirement.

It can include any number of steps depending on individual needs, but every pre-retirement plan should address five key areas: finances and budgeting; health care; tax management; investment management; and estate planning.

Finances and Budgeting
Is your savings plan on track? Do you have enough cash or other assets to meet your retirement goals? Is your debt in order? You need to put together a comprehensive list of all present income sources, including employment income, pensions, 401(k) plans, social security benefits, and investment income.

Another key step is to estimate how much the expenses will be when you retire. One way to estimate living costs in retirement is to use the 80 percent rule. The idea is that once you are retired, you will spend about 80 percent of what you spent now. It's a bit arbitrary, but it's a useful rule for planning purposes.

A financial advisor can help you develop a realistic budget based on your projected activities and expenses during retirement as well as how much income you'll need to sustain them.

Health Care
Health care costs in retirement will vary depending on family history and available resources, but it's a good idea to estimate these costs and build them into your budget. Some options for health insurance coverage during retirement include:

  • Medicare: Generally available at age 65, Medicare can be used to cover the bulk of medical expenses, but does not cover long-term care or prescription drugs. Many people supplement Medicare with other types of insurance policies or programs such as Medicare Part C (also known as Medicare Advantage) or Medigap insurance.
  • Employer-based coverage: Many employers offer retiree medical benefits so check your company's benefits package for details on coverage and eligibility requirements.

Tax Management
Taxes are one of the most significant expenses in retirement – especially if you have a pension or annuity income, which is subject to ordinary income tax rates. Make sure you understand how much income you will receive in retirement, and how much of it will be taxable. If you have certain deductions or credits that could disappear in retirement, consider maximizing them while they are still available. However, if you're unfamiliar with these strategies or haven't considered how you can use them effectively, it's time to talk to a financial planner or tax professional.

Investment Management
Your investment portfolio should reflect the amount of risk that is appropriate for your age, financial goals, and risk tolerance. That may mean the need for more aggressive investments if you're behind in retirement savings or more conservative investments if you're approaching retirement age. A good financial advisor can help you create a strategy that meets your needs.

Estate Planning
Estate planning is an essential component of financial security, regardless of what stage you're at in life. You'll want to make sure that your assets are properly organized so that they will be distributed according to your wishes, and managed on behalf of your dependents if anything should happen to you.

Pre-retirement is a good opportunity to address this issue since you'll have more time available to get everything arranged before leaving the workforce.


Is there legislation on pre-retirement planning?

There is no legislation specifically addressing pre-retirement planning. However, in the United States, there are specific laws regarding retirement plans. For example, the Employee Retirement Income Security Act (ERISA) is a federal law that provides guidelines as to how your retirement funds should be handled.

What should I do 2 years before retirement?

You're almost there. In just two years, you'll be able to retire. Here's what you should do to make sure you're ready.

  • Start eliminating any debt you have including credit card bills before you retire.
  • Re-evaluate your savings and investment strategy.
  • Start working on your budget. This includes thinking about what expenses you'll have once you retire, and how much money you'll need each month to live comfortably.
  • Make sure your health insurance is in order. Understand how your health insurance coverage will change when you retire and what costs may be involved.
  • Think about activities you might like to do during retirement to keep you engaged and inspired.
  • Talk to your financial advisor about your retirement plan so that they can help make sure everything is on track.

When should I start pre-retirement planning?

The simple answer is: NOW.

If you're thinking about retiring in the next five years, now is a great time to start planning! If it's in the next ten years or later, even better! The more time you give yourself to plan for retirement, the easier it will be. This will allow you to make the most of your investments and live comfortably during retirement.

Whether it's through a 401(k) plan or a personal retirement account, planning for retirement should be a priority in every adult's life.

Protecting Your Future, One Decision at a Time

Protecting Your Future, One Decision at a Time

Whether you are trying to decide when to retire or seeking guidance for long-term care, we work with you to identify goals and develop a road map for success.

With a well-crafted pre-retirement plan from the experts at Finn & Meehan Wealth Management, you can help yourself transition into retirement smoothly — and maybe even enjoy the process.

You've worked hard to get where you are. We know that, and we want to help you make sure you can enjoy your retirement. Contact us today for more information.

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