Having a game plan is everything.
Back when I was playing baseball, I’d spend 5-10 minutes preparing for every minute I was pitching in a game.
There were scouting reports, analytics, video files, and personnel to help you be your best self on the mound. By the time the game rolled around, I knew if the leadoff hitter would rollover a changeup down and away, or if I needed to bust him inside with a fastball. I knew if the cleanup hitter chased breaking balls, which players tried to steal a base on the second pitch of an at-bat, and if the other team’s best hitter was hitting .500 vs fastballs on the outer half of the plate.
As Seattle Seahawk’s Quarterback Russell Wilson says, “The separation is in the preparation.” It’s why Russell’s offensive coordinator scripts the first 15 plays of a football game, the president reads off a teleprompter, and builders use blueprints. Preparation reduces mistakes and increases your chances of success. To quote Ben Franklin, “By failing to prepare, you are preparing to fail.”
Retirement, like any other challenge, is a journey that needs preparation. Taking care of a few things on the front end can potentially reduce your stress and increase your savings and quality of life on the back end. Here’s our retirement game plan to help you prepare for the big event.
1. Prepare your assets
Until retirement, your assets are most likely in growth mode. That will probably shift when you quit working. Start to move your assets from a growth orientation and introduce some income into your portfolio. This can include dividend paying stocks, bonds, and rental properties.
2. Decide what to do with your workplace retirement plan
Do you have a 401(k) or 403(b) through your employer? Decide what you want to do with that after you stop working. Your options usually include leaving it where it is, rolling it over to an IRA or another qualified plan, or withdrawing the balance.
““By failing to prepare, you are preparing to fail.””
3. Map out your income
When you retire, your income sources shift. You’ll no longer draw a paycheck from your employer, so you need to think about how to replace that income. For most folks, it’s a combination of investment income and social security, but you should optimize based on your individual situation and the resulting tax ramifications. Speaking of social security…
4. Optimize your Social Security and Medicare
The good thing about Social Security is that they give us options on when to begin distributions. The bad thing is most don’t optimize their distributions. Make sure you understand your Social Security options (you can find those here) and choose the one that fits best with the rest of your income. Along the same lines, be sure to understand Medicare and optimize your selection for you and your family.
5. Solidify you estate plan
Do you have a current will and a durable power of attorney? If not, now is the time to put these in place. An estate attorney (we know a couple of good ones!) or an online resource (Legal Zoom , Mama Bear Legal Forms, and others) can assist with the process. Also, make sure the beneficiaries on your retirement accounts are current and updated.
By most estimates, 50-60% of Americans do not have a will in place.
According to Legal Zoom
6. Cash is king
Be sure to keep 12-24 months worth of expenses in cash or cash alternatives. The money won’t grow much in a savings account, but it will be less volatile. As part of our investment process, we like to boost cash and cash alternatives when the market is high, giving you a buffer for when the market is down. Even if your other assets are down in value due to a market pullback, you can be reassured knowing you have a less volatile position.
7. Have a tax plan
When you enter retirement, your tax liabilities will most likely shift. Be sure to talk to a qualified accountant who can help you plan and reduce your tax exposure.
8. Make a game plan for your time
You will have more time on your hands in retirement than ever before. How will you spend that time? Traveling? Projects? Serving others? Find a couple of pursuits that excite you and plan to spend time on those when you quit working.
9. Adapt and Adjust
Like any good plan, everything won’t go as anticipated. Keep a 30,000-foot view and make changes when necessary. Russell Wilson’s offensive coordinator may script the first 15 plays, but the adjustments he makes at halftime are just as important.
Here at McCall & Associates, we help people build their retirement game plans every day. If you have any questions or would like to have a conversation about how to your plan in place, we’d be honored to help. We aren’t experts in some of the areas above (tax & estate planning). That’s why we’ve built connections with qualified professionals who are top notch in their fields. We’d be happy to refer you.
To get in contact, you can give us a call at 615.370.4040 or send us a message below.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation.
Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Links are being provided for information 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 and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.