Tips for an Approaching Retirement

The best time to plan for and attempt to secure your retirement is before you retire, not after. That being said, it's never (well, almost never) too late to get your ducks in a row. Below you will see a list of helpful items to consider prior to becoming a retiree.

1. Put plans to paper. You may have an idea of what you want to do in retirement, but force yourself to be realistic and put your wants, plans, and desires on paper. This is particularly crucial if you are married. What you may have discussed with your spouse 5 years ago may not be what you or they want as of today. We are human, and we tend to change our minds. Writing down what you want will allow everyone to clearly be on the same page ... or will invite a conversation to allow that "meeting of the minds" to occur. These plans should be revisited regularly (at least yearly), as they may need adjusting from time to time.
2. Ensure investment allocation is appropriate. Most would agree that it is prudent to become more conservative as we approach retirement. At a 30,000-foot view, this typically means shifting investments from equity (stocks) to fixed income (bonds or bond funds). We need to keep in mind that even in retirement, we should have balance. Ideally, you won't need to touch a decent portion of your investments for 10 to 20+ years after retirement. This portion can, and I would argue should, be more aggressive, as there are many years to weather market fluctuations and potentially benefit from higher growth rates. That being said, you do need cash for immediate/near-term use and fixed income for stability and income generation. What mix is best for you will depend on the size of your nest egg, your temperament, and your retirement withdrawal plans.
3. Consider the timing of a large purchase. Considering buying a lake house, cabin, RV, or dream vacation? Consider buying or saving aggressively for that purchase while you are still working. This only serves to take some of the pressure off of your retirement savings. Taking a large chunk out early in retirement can put a serious dent in the growth of your assets, and can negatively affect your end-of-year tax burden.
4. Murphy's law - expect it. Retirement may be what you always wanted, but it doesn't happen in a vacuum. The broken, messed up world is still out there. Things go wrong, people get sick, family/friends need help. It is important to have a cushion to help prepare for unplanned events. These unexpected cash needs can come during the most inopportune times, like when the market is down ... the worst time to sell out. Help avoid this scenario by having an appropriate allocation, including some sort of reserve cushion. 

Hopefully this will help you think through and plan for your financial future. Invest well!