So what can you do?
Start with setting retirement goals. The first step in planning for retirement is to figure out just what it is you’re hoping, wanting and planning to do as you transition into this new phase of your life. This is about designing a life plan and setting life goals that are non-financial e.g. starting a new small business, volunteering, mentoring or beginning a yoga practice.
If you’re working on this as a couple, know for sure that there will be negotiation and compromise involved. Your vision of life in your 60’s and beyond could be quite different than your spouse or partners vision of your future. Don’t be concerned, this is a fairly common scenario.
Once you’re both clear on how you would like the next phase of your life to unfold and you’ve agreed on a life plan, now it’s time to set your financial goals. Your objective here is to develop a retirement income strategy that assures you of never running out of money later in life. Start this process by determining how much income you will need in retirement and where this money will come from. From there, your next step is choosing an optimal income distribution strategy.
The four main retirement income distribution strategies are:1. Systematic Withdrawal
2. Time- based Segmentation
3. Essential vs. Discretionary (most risky)
4. Social Security and Pensions
You could choose to use one of these strategies or a combination of all four. Your goal when picking a strategy, whether you’re in or near retirement, is to avoid having to make any significant changes to your retirement plans or lifestyle, not withstanding a lagging economy.
This post is an excerpt from my e-book The New Retirement Planning, 7 Essential Steps to a Great 21st Century Retirement Plan. Download the FREE e-book here.