Guidelines to Help You Prepare for Your Retirement ‘Graduation’

Are you on the cusp of retirement? These are some tips to keep in mind as you plan this next phase of your life.

This article is co-authored by Brett O’Brien

The summer is fully upon us, and that means another year is in the books. Yes, technically we are only about halfway through our calendar year, but the year span that most of the country seems to mentally operate on starts in the Fall and ends in the Summer. This is because we are programmed this way from childhood, every Summer we end one stage and move onto the next.

Of course, the goal that we work towards as children is to graduate from school, whether that be High School, Trade School, College, Med School, you name it. We all want to successfully complete one stage of our life and move onto the next. Graduating is a huge step in one’s life, and one that should not be taken lightly. This same mindset can be used to help plan for retirement.

There are plenty of things to do before you graduate in order to better prepare yourself for life outside of school, or as my daughter refers to it, The Super Scary Real World. Well, the good news is that after dealing with this Super Scary Real World for awhile, we get to “graduate” once again, but this time into a much more comfortable setting; retirement.

Let’s go over some tips to prepare for the graduation that might just stir up a trip down memory lane.

Talk to an Advisor

When graduating from college or high school, it’s important to talk to your counselors and advisors in order to establish a plan that is custom tailored to you and your future. Preparing for retirement is no different.  In most aspects of life it is valuable to receive advice from those who are well educated in that particular subject. Talking to an educated financial professional is one of the first steps you should make when planning your retirement.

Get an Internship

Compare it to phased retirement, (i.e.) a part-time job to get familiar with the real world, or in this case, part-time retirement to get familiar with retirement.

Set Goals

First determine when you realistically want to retire.  Is your goal when you are first eligible for a full annuity, when your children are through college, when you are eligible for full Social Security benefits, or when work is no longer fulfilling?

It is equally important to give serious thought and consideration to what your desired income needs will be.  This very exercise is not done or even considered by many people approaching retirement.  When I pose this question during client meetings, I usually get: “I have not given any thought to that.”

How can you plan your retirement without an income goal?  How do you know what your savings goal is without knowing what income you will need in retirement?

Remember this is a goal.  For most of our clients they would like the same net income as when they were working.  Some may need less and some may need more, but in general it is usually the same.  For many of us, our expenses may be less during retirement, especially if you currently have children in college or are paying a big mortgage payment.  You may also have different spending needs in retirement, such as your healthcare expenses, which will likely increase at a faster rate than inflation.

Now that you have a net income goal, look at your retirement savings, your annual contributions, and your overall rate of return.  Are you heading in the right direction to meet your target goal?  If not, what kind of adjustments can be made?

Another important consideration is to know your personal rate of return.  This is not a stock market index or what you friends and colleagues are making.  It is the level of risk that you are comfortable with.  Once this is known, you can design your retirement portfolio to be in line with your comfort level and have a pretty good idea on an average rate of return that you can expect.

Setting goals is a very helpful way to allow you to reach your goals and dreams.  Having a retirement plan is vital to allow you to measure your progress along the way.

Talk to Friends Who Already Graduated

Talk to friends who have already retired.  You can learn a lot by listening to the experiences of others, both positive and negative.  This is not all about money.  Learn from others that are happy.  Just keep in mind happiness for some may be babysitting for their grandchildren five days a week while for others it may mean spending time on the golf course, cooking, going to museums, fishing, reading, traveling, sitting on the beach, hunting, Zumba class, yoga, lifting weights, painting, knitting, the dreams are endless.  You have worked 30-40+ years and now it’s time for you to reward yourself!  Let this empower you to plan for your dream.

About the Author

Carol Schmidlin, Certified Financial Fiduciary®, MRFC® is the President of Franklin Planning and has been advising clients on how to grow and preserve their wealth for 25 years. In addition to her financial planning practice, she is the founder of FedSavvy® Educational Solutions, which provides Financial and Retirement Literacy Programs for Federal Employees. She is passionate about helping families with all phases of Wealth Management and is a member of Ed Slott’s Master Elite IRA Advisor Group. Her practice maintains a home office in Sewell, NJ along with a satellite office in Washington, DC. Carol can be reached at (856) 401-1101.