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Ready For Retirement?

Updated: Dec 17, 2021

Reaching retirement is a new milestone in our lives where we finally can pop the cork and celebrate. You might travel, take up a new hobby, or even start a another career.

Retirement should be exciting, but it is a big adjustment. The thought of leaving your job - for good - can be scary.

Our careers play an large role in shaping our identity and to suddenly leave means we have to find something else to fill the void.

It doesn't help that the word ‘retirement’ feels limiting – but it's really not! People used to think of retirement as walking around in a pair of slippers with a pipe.

That way of life has changed because today’s typical 60 somethings are nothing like those of a generation ago. Life expectancies have been on the rise for some time now. A generation ago in North America, men could expect to live up to their late sixties, and for women their mid-seventies. Since then, life expectancies have steadily increased. For people in North America, the current life expectancy for men is around 77 and women 81.

This means today's retirees are entering a new phase of life that could last for decades. So from a longevity perspective, you should consider how to manage your retirement sources more strategically. Getting into the weeds for a second, this includes things like maximizing social security benefits, pensions, and making the most of tax efficient withdrawal strategies on 401k plans, Roth accounts, and after tax accounts.

But how do you handle such a massive transition of leaving your job and organizing your money and various retirement accounts? It's best to plan ahead, and accomplish one thing at a time.

Here are some ideas to help as you get close to "cutting the cord" from your employer:

10 Years From Retirement

It goes without saying - make maximum contributions (max out) to your employer sponsored retirement plan (like a 401k, 403b, etc). Also max out IRAs as well. You might lose sight of this because of other goals, like paying for your children's education or other bills. Allocate as much as possible to your retirement savings first, then save for these other goals/expenses.

A simple budget can help you see what you have available to save. Review your finances annually and re-allocate any paid off debt to retirement savings. Also, have a plan to retire your debt when you retire.

3-5 Years Away

Continue to max out contributions to your retirement savings accounts. If you are eligible, contribute fully to a Health Savings Account (HSA), which can be triple tax free. Open a Roth IRA if you don't have one - there is a 5 year rule that needs to be satisfied (actually there are two 5 year rules, but the second one - for conversions - doesn't pertain if you are over 59 1/2).

5 Star Tip: A Roth IRA can provide you with tax free income, and be a very strategic tool for you later - I can't emphasize this enough! Unless you are feeling very patriotic and love paying taxes!

Review future cash flows and keep in mind how a long life expectancy (longevity risk) may affect you. Social Security scenarios can be overwhelming: what you are eligible for depends on if you are single, married, divorced, a widow or widower, and if you file early or delay. If you have a pension, analyze how to take the benefit and the survivorship options.

Also, if you will retire before age 65 you will need to make arrangements for health insurance since you won't be eligible for Medicare.

1 Year Away

You're almost there. It is strongly recommended to run income and investment risk scenarios and project out cash flows. There are different income strategies that can help prevent you from running out of money in retirement, such as guardrails or floor and ceiling - these two examples allow retirement spending to fluctuate with your investment performance.

Also know which Social Security option you will take and what age you should file. Have your plan for health insurance in place. By now you should understand what pension option you should take and if you will roll over your employer sponsored retirement plan to an IRA.

Interview fiduciary only financial planners with the CFP®. They won't sell you commission products and are held to an even higher standard by the CFP Board.

Don't Forget Estate Planning!

Have a proper estate plan in place. Make sure your financial legacy is passed to who you want - in a tax efficient way - should something happen to you (like a pandemic!).

Getting ready for retirement involves more than just investing and saving and It can be overwhelming.

If you need help with your retirement, please contact me through the email below to set up a no-cost meeting. I would enjoy hearing from you!

John Piershale, CFP®, AEP®

John Piershale Wealth Management, LLC is an Investment Adviser registered with the State of IL and in other jurisdictions where exempt from registration. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned.

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.


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