A key challenge that is likely to be faced by boomers as retirement approaches, is how much should be set aside for the retirement years, according to Florida Today in “Some important considerations for retirement.”
The biggest issue in many families is deciding how much money to spend from their retirement savings accounts and investments. There are many guidelines and formulas. However, no one formula is correct for every situation. It requires a closer look to consider where to draw funds from: retirement accounts or investment accounts, pre-tax or after tax?
There also need to be adjustments made for market volatility and risk tolerance.
It is hard to adjust from living on a steady stream of income from work to depending on withdrawals from what used to be accounts that were only for savings. A well-designed plan and a specific set of actions on how to live on retirement savings without taking too much money, especially at the start of retirement, is critical.
Retirees need to understand that they may, if they are lucky, be retired for more than one or two or more decades. A balance of taking not too much, nor too little, is what is needed to avoid running out of money, or frankly, not enjoying these last decades of their lives.
Savings need to last longer and must also retain their purchasing power, so that inflation, taxes and healthcare costs do not decimate accounts. We have lived through a historically low interest rate environment for many years. However, that is starting to change. We must be prepared.
Adding to the stress for retirees is not having an estate plan in place. Speak with an estate planning attorney to ensure that you have a will, medical directives, power of attorney forms and, if appropriate, one or more trusts.
What often occurs is that one spouse knows everything about all the couple’s finances. When one spouse passes, the other is often left to figure it all out on their own. A better plan is to ensure that both spouses have a complete picture of their financial and legal situation. Both spouses should sit down with the estate planning attorney to ensure that they are both up to speed on what will happen when the inevitable occurs.
Single individuals need to prepare for retirement, with the additional burden of having to rely solely on themselves for funds. Planning for incapacity and general estate planning is more important, as non-family members must be found who can be trusted to make decisions on their behalf, if they are unable to do so and for distribution of their assets after death.
Resource: Florida Today (Oct. 22, 2018) “Some important considerations for retirement”