Seven Suggestions Before Retiring

May 01, 2024
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Seven Suggestions Before Retiring

Planning can help turn a stressful retirement into a successful one.

When helping people prepare for retirement, the same issues generally come up over and over. Planning can spell the difference between a successful retirement with enough money and a stressful one with difficult decisions you don’t want to make.

As such, here are seven suggestions anyone contemplating retirement should think about.

  1. Understand Social Security. The goal with Social Security is not to get the most you can from the government in your lifetime. It is to optimize the monthly amount you receive when you finally retire.

The earliest age you can start Social Security is 62. If you retire at 55 or 60, you might want to claim it as early as you can. But if you plan to work past 70, like many do, there is no reason to take Social Security before then. Doing so reduces the amount you can receive at your full retirement age (67 for workers born in 1960 or later). You can have a very nice bump in your benefits every year you postpone taking Social Security. That bump is often a better deal than starting early and taking the most money you can.

  1. Are you going to work after you retire? Your retirement might not be retirement. It could be about doing something different. For you, this might mean you take on part-time work, perhaps in the industry you spent decades in, or in an entirely different field. It brings extra money and occupies your time. If this is what you want, then factor it into your plan. Hopefully, if you decide to work, it’s because you want to, not because you are short on income and must work. That’s where the strength of your regular savings comes in.
  2. What happens if you get very sick? No one likes to think about it, but a major illness can upset even the best financial plan. You need to consider what will happen to your life if you are incapacitated. Medicare doesn’t cover all your health-care expenses, like nursing homes. There’s a good chance that you need to pay for uncovered extras but lack sufficient income during the worst of your illness. What would you do if that occurs?
  3. Where do you plan to live? The place where you spent your working years may be too costly in retirement. Plenty of lists exist of good locales to move to. What if you owned a business that didn’t do as well as you planned, and you sold it for less money than you expected? You could move to a less expensive place, where you could continue to live as comfortably as before. In other words, you get in front of the problem. Uprooting your household might cause you some inconvenience, but maybe not so much that you must seriously change your lifestyle.
  4. You’re going to feel funny not working. Not going to work every day takes some adjusting. You might feel lonely. Your phone is going to ring much less. The people you spent tons of time with just fall off the map. You might feel that no one likes you. It’s called the retirement blues. You might think you are prepared for all those newly empty hours, but most retirees are not.
  5. Timing could make or break you. If the market melts down in the first few years of retirement, you likely have much less money than you planned, and you must spend your nest egg faster than you expected. It is only good planning to stress-test your finances by assuming you lose money at the outset of retirement.
  6. Do a financial plan. You need one to prepare for the best – and the worst possible – outcomes. Part of that process is scenario analysis, which gives you an idea of how much you stand to lose under the worst case. Test your portfolio to make necessary adjustments. You might decide to postpone retirement, or to change your retirement goals.

Doing a financial plan once is not enough. Every few years, you need to dust off the plan and go through the tests all over again. What you don’t want is to reach to retirement and find out your assumptions never came true, unless you like potentially nasty surprises.

Your financial advisor

Remember this: when you plan for retirement, you model out your financial expenses and lifestyle choices. But just because you're close to retiring doesn't mean that your planning stops.

At Popular, we are here to guide you in preparing for retirement. If you want to start or review your retirement strategy, contact Popular’s Retirement Center at: educacionretiro@popular.com.

The Retirement Center services may entail a cost.

The information and general descriptions in this article are designed to help you understand some of the factors you should consider when evaluating the appropriateness of any strategy or investment within your retirement plan. Any description included is only for informational and educational purposes and for your independent consideration; it is not to be regarded or viewed as advice or as a suggestion to take (or refrain from taking) any particular action. By providing this information, we assume that you can evaluate it, as well as the 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.

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