Planning to Retire Within Five Years? Retirement Planning Questions You Should Consider Now

If you're planning to retire within five years, you might be getting restless thinking about whether or not you’re financially ready. While five years isn't long to finalize retirement planning, you can probably look forward to decades of retirement and, just as you would consult a doctor about your health or a realtor about property purchases, you might consider consulting a certified financial planner to ensure you've got plenty of retirement savings and the right plans in place to make your retirement goals a reality.

With your retirement goals in mind, consider these questions to help you understand the sort of discussions you might have with a retirement planner.

When Should You Begin Taking Social Security Income?

Just about every American has to decide when to begin Social Security payments. In general, the longer you delay, the larger payments you can expect. Still, many people decide they can benefit more by drawing income earlier instead of waiting until later. After all, it's impossible to predict such things as your health in several years or even the way that Social Security will work.

Really, you should probably not make this decision in a vacuum. For instance, you should consider such factors as other income sources, likely tax bills, healthcare, and potential living expenses. If you're married, you should also factor in your spouse's retirement income from Social Security and other sources. You can always choose to take Social Security later, but once you decide to accept this income, it's a lifelong choice.

Can you count on Social Security in the future?

You may have read that some forecasters believe that the current Social Security Trust Fund will be exhausted by 2037, as explained on the Social Security Administration website. Even so, and even if the government doesn't change anything, the SSA says they can pay at least three-quarters of their obligation from tax revenues after that date. Other more optimistic forecasts believe that the trust fund can remain solvent for at least another 75 years, even with no changes to current rules or taxes.

As with other aspects of planning for the future, even Social Security has to plan for an uncertain future. That future may depend upon birth rates, future changes to the tax code, and even immigration. It's likely that you will still have access to all or at least most of your promised funds, but nobody can say for sure.

How long should you plan to work for at least part of your income?

Even if you decide to retire from your present career, you might join the millions of seniors who still work to earn at least some of their income. Lots of older people enjoy the social aspect of going to work. Others see retirement as a chance to start a business that's based upon their previous hobbies or vocations.

On the other hand, planning to rely upon this sort of retirement income often points more to a failure to plan than a plan to work. You really can't predict your health a few years in the future. You also can't foresee how well the economy will provide retirement jobs. Even if your retirement planning includes working, you should come up with a contingency plan in case you decide you'd rather not or can't work.

Are your current investments too risky or too conservative?

The traditional and probably prudent wisdom suggests choosing less aggressive investing strategies right before and during retirement. Typically, conservative investments will provide more modest returns. On the other hand, riskier financial products might give you the chance to make a lot of money or to lose everything.

As you have probably noted during economic downturns of the past couple of decades, some kinds of stocks and other investments provided good returns for a long time and then took dramatic tumbles, at least in the short run. During these downturns, the last thing you want to engage in is the kind of panic selling that investors who haven't balanced their portfolio well tend to do.

While you can always make some trickier investments, you should probably consider balancing your funds to provide you with both good returns and financial independence. The right balance will depend upon your total retirement savings, income sources, and planned lifestyle and expenses.

Should you worry about increasing healthcare costs?

At age 65, most Americans qualify for Medicare. This public plan covers a wide range of expenses; however, it also comes with copays and deductibles, the Part B premium, and no out-of-pocket limits. It also won't cover every kind of health expense, such as routine dental or vision care. Thus, healthcare forecasters say you should expect to spend $5,000 to $10,000 a year on medical bills during retirement, even with Medicare Part A and Part B.

Most people choose to make healthcare expenses more predictable with Medicare supplements, drug plans, and other kinds of insurance. You will need to pay premiums for most Medicare insurance, but you may have a chance to reduce or even eliminate most out-of-pocket charges. Also, don't forget to look further into the future to a time when you may need additional services, such as long-term care. If you need to pay for assisted living or skilled nursing home, you will probably have to spend more than $5,000 to $10,000.

How much can you afford to spend each month during retirement?

Some retired people end up spending more money during retirement because they have more time to travel and enjoy hobbies. Others may spend more because their health and personal situation requires extra care. On the other hand, a number of retirees enjoy staying home more and have even downsized their homes and lifestyles to help reduce expenses.

You should think about your own future lifestyle and retirement goals as a vital part of your retirement planning. Take a good look at your current budget and think about which things you might spend more or less on every month. Also, remember to factor in inflation, especially if you live in an area with rapidly rising living costs.

How to Ensure Your Retirement Planning Leads to a Sound Financial Future

Here at Medallion Financial Group, we know that you worked hard to earn your retirement savings. If you plan to retire within five years, it's time to make sure that your retirement savings continue to keep working hard to earn for you. You can contact us to speak with a certified financial planner, who can help answer your retirement planning questions in light of your own unique circumstances and goals.

We can help you develop a financial plan, select the right insurance, and if you choose, even manage your portfolio. Out of the many Social Security options available to you and your spouse, we can help you select the option that's ideal for you and your spouse. To get started, schedule a free and no-obligation consultation with a certified financial planner today.

 

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At Medallion Financial Group, we believe financial planning is about Family. We have been helping families invest in the future since 1987 through a holistic planning approach. We recognize there are a variety of needs when it comes to retirement planning, plan rollovers, annuities, college planning, life insurance options, and investment management. It is easy to get lost in a sea of choices. Our financial advisors help with the basics and beyond to enable our clients to get the education, advice and management they need to retire with confidence.

Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.

We strive to exceed client’s expectations – because we have high expectations of ourselves.