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There’s a Chance You’ll Have to Retire Early – Stay Prepared

Mark J. Smith, CFP®, CPA/PFS, CIMA®
November 15, 2018

The "golden years" (a term coined in the 1950s as an advertising pitch for a retirement community) has become an end-goal that justifies our hard work and well-deserved earnings. Reaping the benefits of planning, saving and investing, retirement allows us to travel, spend more of our time freely, and enjoy spoiling grandchildren and spending time with family.

 

However, even the best planning does not always go as expected. According to the 2017 Retirement Confidence Survey, 48% of retirees left the workplace sooner than they had planned. Among this group. the top three reasons for doing so were because of health problems or disability (41%), company downsizing or closures (26%), and having to care for a spouse or other family members (14%).

 

Although we cannot predict the future, we can try to anticipate certain aspects of our retirement situation so that when we are close to retirement we have options that help achieve our ‘golden years’ aspirations. To help ensure you enjoy your soon-to-be retirement - especially as some situations happen unexpectedly – we have highlighted some key points that will help provide financial security later in life.

 

1)   Review Your Goals: As you near retirement (typically within five years), it is important to ensure that your financial plan is still accurate and based not only on your current situation but also on your retirement goals. What once may have been a priority for you and/or your partner may now have changed for several reasons, such as finances or family circumstances.

 

2)   Double-Check Often: At this point in your life, you want to reduce risk as much as possible. Looking at your credit report more than once a year is important to ensure security breaches have not affected your financial well-being.  Also look at your current investments and consider rebalancing at least once a year. Now is not the time to invest in risky opportunities, so it is important to see how your investments are performing and update as needed.

 

3)   Save, Save and Save: This is the time to max out your retirement contributions and put as much as you can in an emergency fund. Take a look at all of your retirement savings plans and – at the very least - ensure that you are taking advantage of your employer's matching program. Not only does this give you tax-free savings when it’s time to retire, but there are also many tax deduction benefits.

 

4)   Understand Social Security: With every paycheck, social security deductions are taken out and applied toward our retirement benefits. Understand why and how you can use these benefits and when social security will be taxed. Certain ages and additional income post retirement may affect the amount of social security you receive.

 

5)   Medicare Complications: If you end up retiring early, you may need medical insurance to fill the gap to get you through the period of time before Medicare takes effect. Having a plan in place to cover all scenarios when it comes to medical needs will help prepare for rising healthcare costs, especially when you need it most.

  

Retirement is a time that should be filled with excitement, happiness and a well-deserved, worry-free adventure, which is why it is important to feel confident in your financial well-being.

 

If you’re approaching retirement soon, or if you are interested in starting the retirement process, we would be happy to review your portfolio and/or discuss your options to help you understand the impact of your investments.

 

We are here to ensure you are headed in the right direction and want to help support your family’s immediate and long-term financial planning. Please contact us today!

This information does not purport to be a complete description of the developments referred to in this material. Links are being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.  Raymond James and M.J. Smith and Associates does not offer tax advice.  Please consult the appropriate tax professional.

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