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Countdown to retirement: How to make sure you’re on track at these 4 milestones

No matter how near or far retirement is on the horizon for you, taking steps to prepare now may help ensure that your post-work life is more relaxing than taxing.

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Retirement planning can feel daunting, but taking steps to prepare now can help ensure that your post-work life is more relaxing than taxing.

Our biggest piece of advice (no matter how old you are): Get professional help. A financial advisor can help you create a personalized retirement plan and help you adjust it over time.

Whether retirement is a soon-to-be reality or a far off dream, here are four pre-retirement milestones to have on your radar, according to the financial advice team at Richardson Private Wealth Advisors:

10+ years out: Revisit tax diversification

With retirement still 10+ years out, it’s time to ramp up your savings and ask your advisor how you could allocate your assets across three tax-related categories to help manage your tax burden in retirement:

  • Tax-deferred
  • Tax-free
  • Taxable

Tax diversification can help you:

  • Keep more of your savings
  • Maintain control of your withdrawals
  • Adapt for unexpected life events

5 years out: Define your retirement goals

Ask yourself: What’s important to you? What would you like to do with the additional freedom + flexibility in your life (think: travel, new hobbies, a second career)? How much money will you need?

To narrow in on the activities, ideals, and the retirement lifestyle you value most, ask yourself these seven key questions + considerations.

Once you know your goals, you can start to make sure your retirement savings are on track.

2-5 years out: Plan for Social Security

Social Security is an important source of income for many retirees. But it’s important to plan for how much you’ll receive, when you’ll start to receive it, and how it will fit into your overall retirement income.

Deciding when to file for it is a critical step in retirement planning. Although you can start collecting benefits at age 62, you may want to consider delaying, depending on your circumstances. With each year you delay, your overall benefit increases until reaching the maximum amount at age 70.

Richardson Private Wealth Advisors will look at:

  • Varying tax rates on Social Security income
  • Capital gains and IRA withdrawals
  • Health issues and life expectancy in your family history

In the two to five years before retirement, you’ll also want to:

  • Maximize contributions to your retirement plans to meet federal limits.
  • Pay down unsecured debt (think: credit cards).

1 year out

Consider keeping two running lists — either conceptually or literally using separate credit cards and checking accounts — to quantify two types of expenses:

  • Essential needs, such as housing, groceries, utilities and health care.
  • Lifestyle spending, such as travel, hobbies and dining out.

Use these lists to help you accurately predict how much you’ll need for necessities and the activities and/or travel that can make retirement so sweet.

Ready to get planning? Schedule an appointment with a consultation with a financial advisor.

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