Pre-Retirement Financial Checklist

Are you within a few years of retirement? Now is the perfect time to get your financial house in order. Here’s what to include on your pre-retirement financial checklist:

401(k) Plans

Decide what to do with your current 401(k). You generally have three options:

• Leave the assets with your soon-to-be-former employer.
• Roll them into an Individual Retirement Account (IRA).
• Take a distribution (note: this last option can result in a hefty tax bill).

Company Stock Options

Do you have stock options you haven’t yet exercised? Review the terms and expiration dates and explore your choices. Company stock often involves tax implications—especially if held within your retirement plan—so consider consulting a financial advisor.

Other Employer Benefits

Your 401(k) might be your most significant benefit, but it’s not the only one worth evaluating:

• Does your employer offer retiree medical coverage?
• Can you continue other benefits, such as life or dental insurance, at group rates?

Review what’s available and factor it into your retirement plan.

Pensions

If you’re fortunate enough to have a pension, several critical decisions await:

• Should you start collecting at retirement or delay?
• Should you take a lump sum and roll it into an IRA, or opt for a monthly annuity payout?
• If choosing annuity payments, which option fits your needs best?

These decisions should align with your broader financial situation and your ability to manage a lump-sum payout effectively. Unless you need immediate income, rolling a lump sum into a tax-deferred account like an IRA is often the most tax-efficient route.

If you earned a pension from a former employer, contact them to confirm your benefit details and ensure your contact information is current to avoid delays when you begin distributions.

Social Security

You can begin taking Social Security at age 62—but doing so reduces your monthly benefit. Waiting until your full retirement age (67 for those born after 1960) or even delaying until age 70, will increase your benefit.

If you’re married, coordinate your strategy with your spouse’s benefit for maximum advantage.

Review Your Financial Resources

Over your working life, you’ve likely accumulated a wide range of assets. Take inventory:

• Employer retirement plans (401(k))
• Traditional and Roth IRAs
• Pensions
• Stock options or restricted stock units (RSUs)
• Social Security
• Taxable investment accounts
• Cash, savings, CDs
• Annuities
• Cash value in life insurance policies
• Inheritances
• Business interests
• Real estate holdings
• Potential income from part-time work in retirement

Now’s the time to review these resources and develop a strategy to use them effectively to support your desired lifestyle.

Determine Your Income Needs

Build a realistic retirement budget:

• Will you stay in your current home or downsize?
• What hobbies or travel plans do you have?
• What are your essential living expenses?

Compare your projected expenses to your expected income from the sources above. This analysis will help you understand whether your current assets are enough—or if you need to adjust your plans.

Also, map out a plan for which assets to draw on first and how to coordinate withdrawals throughout retirement.

Food for Thought

The golden years can be some of the best of your life, but reaching them comfortably requires smart and proactive planning. Be sure to consult a professional before taking any action. Contact the Retirement Center at Popular by writing to educacionretiro@popular.com or complete the form and one of our representatives will assist you. Start preparing today to build the retirement you desire.

The information and general descriptions found in this material are designed to help you understand some of the factors you should generally consider when evaluating the appropriateness of any strategy or investments within your retirement plan. Any description included is for informational and educational purposes and for your independent consideration only; it should not be regarded or viewed as advice or as a recommendation to take (or refrain from taking) any particular action. By providing this information, we assume that you can evaluate the information and general descriptions found here to exercise your independent judgment. Banco Popular de Puerto Rico, its subsidiaries and/or affiliates are not engaged in rendering legal, accounting or tax advice services. If legal, accounting, or tax advice services are required, you should seek the services of a competent professional.  Investment products available through a retirement plan are not insured by the FDIC, they are not deposits or obligations of, nor are they guaranteed by Banco Popular de Puerto Rico, its affiliates and/or subsidiaries; and may lose value, including the possible loss of the principal invested.

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