If you’ve recently retired or are about to, congratulations! It’s probably been a long road, and your next step is to make sure that path continues during retirement. This means it’s time to speak with your financial advisor to create, or update, a comprehensive investment plan.
Here’s a brief “how to prepare for retirement” guide to help you get started.
1) Gather All of Your Financial Statements
This list includes but is not limited to:
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IRAs
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401(k)s
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Brokerage Account Statements
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Stock certificates/stock options statements
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Social Security statements
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Pension statements
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Bank statements
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Credit card statements
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Mortgage statements
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Insurance policies
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529 plans
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Trusts/Living wills
- Any other statement that makes up a part of your balance sheet
Gathering these financial documents will allow your financial advisor to create a comprehensive overview of your finances and hopefully make recommendations for improvement. Looking at all of this information together is critical in determining where you stand as you enter retirement, and it will help your advisor know what actions are needed to reach your goals.
2) Make a Detailed List of Your Expenses
Knowing your expenses will help determine your cash flow needs in retirement. The more detailed your list of expenses, the better you can plan. A sample list of monthly expenses might look something like this:
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Mortgage
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Insurances
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Credit Card payments
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Revolving bills (cable, internet, cell phones, etc…)
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Discretionary spending (clothes, groceries, gas, golf club membership, gym, etc…)
Your monthly Social Security checks and pension checks (if you receive any) may help you pay for these expenses, but in many cases you’ll need to pull money from your investments on a regular basis as well. Providing this list of expenses to your financial advisor will help estimate how long your money will last and illustrate how your accounts may fare over time. It will also help determine what kind of asset allocation makes sense for you, and which accounts you should pull money from.
3) Make a List of Your Goals in Retirement
Want to buy a second home in the mountains? Pay for your grandchildren’s college education? Pass money to your heirs through your estate? All of these goals can and should be factored into your comprehensive investment plan.
We see a lot of retirees who have these types of goals, but they fall short of actually quantifying them as expenses in their plan. Many financial advisors have programs that allow them to tinker with various costs and numbers associated with your goals, which also helps determine how you can reach them.
Don’t Wait – Call a Financial Advisor Today to Create Your Investment Plan
Taking the three steps above will help you and your financial advisor figure out how to allocate your portfolio, which money manager strategies to choose, which accounts to use for cash flows, when and how much to take as cash flows, and so on. A well-constructed investment plan will also allow you to make adjustments when you experience changes to your cash flow needs, investment objectives, time horizon, goals, estate planning needs, or anything else that happens during retirement.
An investment plan isn’t just about picking investments – it’s about how your investments and your decisions work for you and your family’s needs throughout retirement and beyond. Feel free to give one of our Wealth Managers a call at (800) 541-7774 to speak about, or create, your investment plan. Or get started here.
