Hello and welcome to Radiant Wealth Planning, a virtual financial planning and investment management firm exclusively for women. I’m Randa Hoffman, owner, and financial planner, and I’m located in sunny Newport Beach, California.

Today’s blog is a fun one because we’re going to be talking about getting ready for retirement. I’m going to touch on 7 things to consider before you retire, and when I say before you retire this is not 1 week before. There are some things I want you to think about 5 years before. To keep this short, I’m not going to cover every single thing, but to expand on it I put a link below so you can see what other things might apply to you.

Making the decision when you’ll make work optional is very exciting, and congratulations! If you haven’t been working with a trusted financial planner, I’m going to encourage you to do so, because this life event is a biggie and it’s custom to you. There are so many things that a blog or checklist can’t cover, but a good planner will know how to uncover things so that you have them taken care of before the big day. 

1: Create a new budget

OK let’s start with the obvious one, you need to create a new budget. How you spent your money pre-retirement is going to look different in retirement. Two big changes to look for: some of your current expenses like gas and utilities may go up or down so make sure you allocate the right amount of money to each. And second, you may have new items in your budgets like health insurance, and new association dues for those hobbies you’ll have time to do. Doing this exercise will let you know what your new “paycheck” amount is going to be. This is something I recommend clients do several years before retiring. The closer you get to retirement the more the plan comes into focus. 

2: Know what is impacted by a retirement age

The second thing to know is that your retirement age will affect a lot of things. For starters it’s going to affect which accounts you can take money out of, it will also affect when you can take Social Security and the amount, and health insurance.

3: Maximize your pension

Ladies, if you’ll be getting a pension please work with a planner to determine the best payout option to maximize your benefits. Every pension is set up differently, but they all give you payment options. I have seen a pension offer 9 main options with variations for each. The options that I’m referring to are things like single life (or you might have heard of straight life), or joint life. A planner can calculate which selection will give you the most dollars, which is critical because once you pick the option you can’t change it.

4: Know your health insurance options

The fourth thing I want you to look at is health insurance. If you’re retiring before 65 you can’t get on Medicare yet, so will you be going on cobra, or does your employer offer retirement insurance, or are you going to be going to the exchange to get your health insurance? This is a big expense so please make sure you factor this into your budget.

5: Have a 401(k) loan payback strategy

If you have a loan on a 401K when you leave your employer you’ll have 2 options, you can either pay the remaining balance or if it’s not paid back then the balance is considered as income for that year with the possibility of an early withdrawal penalty.

6: Plan what to do with your business

For our women business owners out there #6 is for you, and this is one that you have to plan at least five years in advance. Have a defined succession strategy, meaning do you have a next-generation employee that’s going to take over, or an exit strategy, are you going to sell your business to an external buyer. 

7: Reevaluate your risk tolerance

The last thing I want you to consider is your risk tolerance or think of it as your volatility tolerance. You might shift down to handle fewer fluctuations but it’s a myth that once you retire all your investments need to be converted to bonds, the reality is that might not sustain your income and you will need growth in your investments. Don’t shy away from stocks, because you can balance the level of risk you’re comfortable taking with what is needed to sustain you through the next 20, 30, and maybe even 40 years.

There are so many things to consider, so click on the link below to download the checklist.

I hope you’ve enjoyed this blog and if you want to read more from me, be sure to sign up for our monthly newsletter at RadiantWealthPlanning.com, and like us on any medium you find yourself on, whether it be YouTube, Facebook, Instagram, or LinkedIn.

Click here to download the document.