Investor Education | Questions to ask before retirement

Are you nearing retirement or contemplating calling it quits early? In either event, this decision requires a thorough analysis of your situation. Although everyone's circumstances are different, here are some key questions you should ask yourself:

Can I afford to retire?

This is often the ultimate question, but it should be addressed first. Retirement planning is complex but often boils down to whether you have enough income and savings, after subtracting your living expenses, to live comfortably. Take the time now to project future costs such as housing, entertainment and travel, health care, taxes and so on. Add up estimated amounts to be generated by such assets as investments in securities and real estate, retirement plan accounts and IRAs, Social Security benefits and others. Clearly, if your expenses will outpace your income and savings, you are not in the best position to retire.

Do I have any debt?

If you are overburdened by debt, reducing or eliminating this obligation should be one of your top priorities. Ongoing debts could significantly erode your retirement savings if you are not careful. In some cases, it might adversely affect your living conditions. If you cannot pay off debts soon, consider a consolidation that enables you to benefit from a reasonable interest rate over time.

What is my investment allocation?

The time to begin shifting assets to meet your retirement goals is before you actually retire. Develop an overall plan designed to provide sufficient retirement income without incurring more risk than you would like to assume. This requires a careful balancing act with the assistance of your financial advisers. Review the plan periodically to ensure that it continues to meet your needs, and make any necessary adjustments.

When should I apply for Social Security?

This is a tricky proposition and in itself requires an in-depth examination. Generally, you can begin collecting benefits at age 62, but at an amount less than what you would receive at "full retirement age" (FRA). FRA varies according to your date of birth, but it is age 66 for most Baby Boomers. Alternatively, you can receive a greater benefit if you postpone application until you reach 70.  Crunch the numbers for  your situation.

What will you do in retirement?

This leads back to the first question. Do you intend to travel extensively or enjoy other expensive pursuits? What about down sizing and/or moving to a different climate?  Do you expect to transfer wealth to the younger generation?  Your vision of retirement can have a significant impact on how and when to retire.

Should I meet with my financial advisers?

For most people, the answer is an unequivocal "yes." Your professional advisers can help set objectives, fine-tune your plans and make important decisions involving retirement account options, investments and the like.

This newsletter/advertisement is produced for our clients, friends and associates through an arrangement with WPI Communications, Inc. for the representatives’ use. Although the editorial content is professionally researched, written and edited, neither our firm nor any of its agents, representatives or associates make any representations regarding the accuracy of the content or its applicability to your situation. The information in this communication is not intended as tax or legal advice. In accordance with IRS Circular 230, the information provided herein may not be relied on for purposes of avoiding any federal tax penalties. Any tax advice contained in the body of this material was not intended or written to be used, and cannot be used, by the recipient for the purpose of 1) avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions, or 2) promoting, marketing or recommending to another party any transaction or matter addressed herein. You are encouraged to seek tax or legal advice from an independent advisor.

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