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Five Years Out

Retirement Planning

The National Association of Personal Financial Advisors (www.napfa.org), the association of Fee-Only financial advisors, recently announced the results of a survey of its members as to their top retirement planning advice for pre-retirees.  The advice was structured for 5, 10 and 20 years out from retirement day.

To jumpstart Americans’ retirement planning, NAPFA asked its members to rank advice that represents the type of comprehensive planning that consumers should expect from a financial planner, including estate planning, investments, education funding, insurance and risk management, retirement planning and senior issues, among others. NAPFA-Registered Financial Advisors are CFP-certified, Fee-Only advisors that meet the highest education and ethics standards in the financial planning profession.

Here are the recommendations for 5 years out from retirement.  I’ll cover the 10 and 20 year out lists of recommendations in future blogs.

  1. Make a list of retirement “needs” and “wants.” If you do not have enough savings for all your “needs,” make a five-year plan to increase your funds.
  2. Fine-tune your retirement income plans. Review your projected expenses, add up your reliable sources of income and figure out how your investment portfolio will cover the gap.
  3. Run tax projections periodically to ensure you take advantage of opportunities the IRS provides, such as ROTH IRA conversion strategies.
  4. Double check your reported Social Security earnings (socialsecurity.gov) and resolve any discrepancies now. Explore your Social Security claiming options and make sure you understand the timing of applying for benefits.
  5. Ask your HR department about the relationship between your current health insurance and Medicare, as well as what your options are when you reach age 65. Get information about any pension or defined contribution options and any other retiree benefits.
  1. Continually monitor and analyze your mix of stocks, bonds, cash and other investments to make sure it is the right one for you.
  2. Understand whether or not you should move to a more conservative asset allocation or continue investing for growth.
  3. Research when stock-based compensation might expire and what stock awards you can retain after retirement.
  4. Make sure that all of your estate documents are up-to-date. Verify that your named executors and proxies know your wishes and are willing to act on them if needed.

If you are five years out from retirement you should get started on this list right away.  Let us know if we can help.