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Five Things to Do Five Years Before You Retire

Published: January 21, 2021

Five Things to Do Five Years Before You Retire

What should you try to do within five years of deciding to retire? Here are five things to think about:

  1. Estimate the monthly income you will need. It may be less than you need now, as your monthly expenses may decline. You may need to adjust or reallocate your portfolio and take another look at both income-producing and growth investments. You’ll also want to factor in the amount you will receive from Social Security as well as Required Minimum Distributions.
  2. Determine whether you will stay in your existing home or move. Retiring to another state may mean tax savings. Many retirees decide to downsize to a smaller dwelling to lower their living expenses. Also, consider whether you wish to move closer to your immediate family members and grandchildren. Traveling can get more difficult with age, and there are many advantages to having your family in close proximity.
  3. Think about debt and taxes. It’s possible that you will retire to a lower income tax bracket than what you are currently. If you can stand the one-time tax hit, converting a traditional IRA to a Roth IRA could someday give you a source of tax-free retirement income. However, before making this change, talk with a qualified tax professional to make sure this is the right decision for your unique scenario. Converted amounts are usually taxed as income, and age and income restrictions may apply.
  4. Consider healthcare costs. Will you be eligible for Medicare? Will Medicare provide enough coverage? Remember that many retirees will eventually need long-term care at some point during retirement, which can quickly drain your savings.
  5. Imagine what your ideal retirement looks like. How do you plan to fill your days during retirement? Do you plan on traveling the world or staying home and building your dream garden? Is there a hobby you want to explore but never had the time to try? Make sure your finances can support your retirement goals, whatever those may be.

If you'd like help in planning a smooth retirement transition contact our partners at Fellows Financial Group. Fellows' planning services are available to all USSFCU members, simply call 571.205.1515 or schedule a time to discuss.

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Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Wealthcare Advisory Partners, a registered investment advisor. Wealthcare Advisory Partners and Fellows Financial Group, LLC are separate entities from LPL Financial.

This material was prepared by LPL Financial. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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