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As you approach retirement, obviously you need strategies to help you accumulate, grow and protect your wealth. But that is the bare beginning of retirement planning. When the time comes that you are relying on your assets alone to produce the income you need, you must also be able to:
- Set priorities and manage cash flow;
- Minimize taxes;
- Reduce investment risk; and
- Have an orderly plan for spending down the various components of your portfolio.
If you expect your estate to outlive you and hope to pass it on to your chosen heirs, you may already have a professionally-developed estate plan. But you also need to know the effects of current financial decisions on the future value of your estate when it reaches your beneficiaries. Even if you don’t expect to pay estate taxes, you may nonetheless need to estimate estate settlement costs, update your current basic documents—wills, “living wills,” and health care proxies—as well as review your beneficiary designations (particularly on pension plans and IRAs) and the titling of your property. These items can be approached by developing preliminary plans to be refined by an attorney or by working together with your current legal counsel.
In addition, you may need general information or have specific questions on Social Security, retirement health care including Medicare, and long-term custodial care. If these are upcoming issues for you, they can be addressed in your Retirement Roadmap.
In developing your Retirement Roadmap, you set the direction by establishing your goals in priority order. As the process goes forward, you will have an opportunity to view alternative ‘what-if’ scenarios for inflation and taxes (the “things we can’t control”). You will also be able to see the consequences of your choices in areas where you can exercise some control, such as your current savings rate, how long and how much you work, where you live, and how much investment risk you are willing to take. You will be able to see clearly where you are now and how to get to where you are going.
It’s meant, after all, to be a roadmap. . .
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