Preparing for Retirement

Steve: Hi, this is Steve and Barry with McCall and Associates, and Barry, I have a question for you. What are the one or two things that you would say to soon to be retirees or those that are considering it over the next couple of years.

Barry: Steve, I think I would answer that by saying there's not one or two things. There's maybe one or two categories that I think are really, really important that people look at, and one would be the financial side of things. So I would say from a financial side, one is to really get a handle on your expenses and understand where your cash flow is going. If you've never done it, take your last three months statements, bank statements, credit card statements, those kinds of things, and list out everything that you're spending and just get a good idea of how you're spending your money. If you have debts, pay them off as aggressively as you can before you get to retirement. Ideally, you'd go into retirement hopefully owing nothing other than something still left on a mortgage, but those are a couple things I would say from an expense standpoint.

The second thing I would say on the financial side is how am I going to generate income during retirement? I think of retirement as not ceasing activity, but perhaps no longer of generating income on a full-time basis. So where are my sources of income going to come from? Am I going to take social security at 62, or am I going to wait until full retirement age, or wait till 70? Those are conversations that we can have because we have those with clients all the time. We can help people with what's the best way to do that, but you need to figure out how that's going to happen, in terms of timing for that, but also again, the big picture. Where's my income going to come from?

The other thing I would say is really important is to make sure that you understand what your healthcare options are going to be, especially if you're retire pre-65. Do I stay on an exchange plan? Do I do a private plan outside of that? How am I going to pay for that? Those are things that are really important to understand.

The next thing I'd say is from an insurance standpoint, is to make sure that your insurance policies are all to date. You have beneficiary designations on your retirement plans, on your life insurance policies, that those things are updated as you start in retirement. You have long-term care. Does that accomplish what you want for it to accomplish? Just in reviewing those things. Then let's say important documents, as you get ready to retire. It should be a time of assessing where are we? can we do what we want to do long-term? I think one of the best ways that we've seen clients love their families is by documenting via a will, updating their wills and being really crystal, crystal clear on what they would like to see happen with their assets in the event of their death. So updating your wills, make it very, very clear, having a durable power of attorney established between you and a husband and wife, for example, spouse, significant other. Durable is really important because it still has effect even in the event of incapacitation, which is really when you want a power of attorney anyway. So making sure those types of things are up to date, your healthcare directives, all of that. So when decisions have to be made in terms of healthcare and lifestyle, they've already been done and they're documented on, on that end. So all of that I would put under the financial side of things.

The other big item I think is really important that a lot of people don't give much thought to is how are you going to spend your time. You spent your entire adult life predominantly, or most of your adult life working and engaging your mind. You've been involved with things, and you can't turn it off. You just can't. It's not healthy to do that. So I would say pre-retirees need to spend a lot of time thinking about how am I going to live in retirement? And it's not just vacations, because most of retirement is going to be spent in the mundane. It’s going to be spent in the every day. Ah, I've got to get up. I've got to eat, I'm going to go to the grocery store. I'm going to do this. I'm going to do hobbies, community. It's figuring out that: how are you going to spend that time keeping your mind sharp, so that you really do extend and enjoy the time that you're not having to spend engaging in an income.

So those are the kinds of things that I would encourage people to think about, and obviously we're always glad to talk to people about those if they want to get into more detail.

Steve: Okay, That's great. Very great advice.