Five Retirement Planning Resolutions for 2014

As 2013 comes to an end and you write out your New Year’s Resolutions, I encourage you to take some time to evaluate your retirement goals and focus on making those goals a successful reality for the New Year!  

To help you get started, here’s Five Retirement Planning Resolutions for your Retirement Success in 2014: 

1.      Define your Retirement.

What is your retirement going to look like? What are you going to be doing in retirement?  In order to properly plan for retirement, you need to define for yourself what a successful retirement lifestyle looks like.

2.      Identify your assets and create a budget.

Once you have defined what you want your retirement to look like, take some time to identify your financial assets. What do you have to work with? How much have you saved? How much of it is in retirement plans? How much of it is non-retirement plans? Remember, the day you retire, most likely, those assets have to start generating income.  Once you know what you are working with, now you can identify your income needs and put forth a retirement budget. 

In order to understand what your budget will look like; calculate what your living expenses will be once you retire.

It is extremely important to also ear mark a portion of your portfolio for what we call the unexpected.  No matter how well you have planned for retirement, things are always going to come up that you just don’t expect

3.      Decide when and how you will take your Social Security.

Now, if you are married, this becomes a little more complicated than you might imagine.  If you are reasonably healthy, you ideally want to wait until you’re 70, because each year you delay you could receive 8% more in future monthly payments.  This doesn't necessarily mean this is the best decision for everyone. Everyone has a unique set of circumstances.  There are many variables that affect Social Security benefits, from age and the timing of retirement, from spouses, to taxes, income from continuing work and income from tax-deferred retirement savings. By fine-tuning any of these, retirees may be able to increase or cut their benefits significantly.

4.      Reduce risk exposure.

I've seen so many people who have worked really hard throughout their whole life, accumulate a pretty good amount of assets and then, all of a sudden just a year before they retire, the market tanks.  Suddenly, their investments can’t support this vision they had for retirement and they can’t retire when they had planned.  The retirement income phase differs from the accumulation phase of investing, because once you have retired, you no longer have the same investment timeline to recover from the impact of a market downturn. Most retirees these days need growth to meet the challenges of a long life and the impact of long-term inflation, as well as sources of secure income to ensure that daily essential living expenses will always be met-regardless of market returns. Make sure your risk exposure is in line with your risk comfort level.

5.      Set up future streams of income.

Take parts of your portfolio and allocate those dollars in ways that they will generate streams of income once you retire.  Your income represents your lifestyle.  The more income you have, the more you get to do; the more you get to enjoy life. The point is simple, start setting up future streams of income, now.

I would like to wish everyone a Happy New Year. We hope the start to the New Year will provide you with many things to be thankful for and many things to look forward to.