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8 Steps to Recharge Your Retirement Plan

8 Steps to Recharge Your Retirement Plan

August 12, 2016
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When’s the last time you reviewed your retirement plan? It’s likely that your personal and financial situation has changed over time. Adjustments that reflect life changes can make your retirement plan more effective. These steps can help you recharge your retirement plan so it’s relevant to your current circumstances and goals.

Reset your Retirement Goals: Start by updating your list of retirement goals. Try to draft your new list without looking at your previous goals. Then compare your new list to the previous goals. How have your goals changed? Now organize your goals into three parts: Short-term (the 1st year of retirement), mid-term (2nd year to 5th year of retirement) and long-term (beyond 5 years of retirement). Try to assign a dollar value to each goal when possible. This process will help you see the costs associated with each part of your retirement vision.

Recalculate Value of Assets: To maintain an effective retirement plan you should recalculate the value of your assets periodically. List, analyze and recalculate: income, savings account, 401k, IRA, retirement funds, nontraditional assets, home equity and other assets. Now audit your assets and determine the appropriate changes to your retirement plan. Develop a Net Worth Statement so you can clearly see where you stand currently. If you’re unhappy with the numbers you see, don’t get down on yourself. You can still make positive changes now to improve your position before retirement age.

Evaluate Your Health: Being sick is expensive. Retiring healthy means you could spend less money on healthcare. Are you doing the right things to stay healthy now and when you retire? Could you take more preemptive measures now that will increase the likelihood of better health during retirement? It’s not just about exercising and eating right. Take care of your teeth because dental work is expensive. Plus, do what you can now to stay mentally sharp and maintain overall wellness. Good health will allow you to get the most out of your retirement years.

Estimate Retirement Healthcare Costs: Healthcare expenses are a reality that all retirement plans should take into consideration. If early retirement is your goal then look into insurance options now. Because if you retire before 65 your health insurance won’t include Medicare. Learn how your health insurance will change at age 65 and what Medicare or Medigap insurance will be available. Do you have a plan for in-home care or a nursing home? How much is Long-Term Care Insurance and do you need it? Fidelity says a retiring couple age 65 can expect to spend $245,000 on health care. Estimate your costs so you can prepare for retirement now.

Create your Social Security Strategy: Start thinking about your personal Social Security strategy now. Every year you get a statement showing your contributions. Use this statement to estimate your benefits if you collect at 62 or 65. Then estimate the difference if you wait until 70. Will you need benefits right away or is waiting until 70 the best option? Age isn’t the only thing to consider. Other factors like marital status and the working status of a spouse need to be considered. Another factor to consider is what percentage of your retirement income will come from Social Security benefits.

Determine if You Need to Work (Or Want to Work): Some people need to keep working when they retire. Some people want to work. Start thinking about your personal situation and how you feel about employment during retirement. This can be a financial decision and a lifestyle decision as well. What standard of living did you include in your retirement goals? Also, working during retirement is a decision about time. How much time are you willing to spend working? Maybe you want to keep doing what you’re doing today but part-time. Working part-time during retirement is a great opportunity for some people to try a completely different job as well.

Explore Ways to Cut Expenses: When’s the last time you printed all your bills and looked at ways to cut expenses? If you use auto-pay for bills it’s easy to overlook an expense. Don’t forget about debit management as a way to save money. Paying off debit sooner rather than later saves money. Saving more can only make you better prepared for retirement.

Revisit Risk Tolerance: Maybe after reevaluating your retirement plan you feel comfortable with more risk. Or maybe you want to reduce your risk. Is your current level of investment risk working for you? Are you achieving your goals? Are you missing opportunities? Would more risk make sense at your age? Or would a lower risk strategy be best at your age? Balancing risk and return will be ongoing as your circumstances change and you get closer to retirement age.

Related blog posts:

5 Things You Should Know About Social Security

99 Fun & Fulfilling Things to Do During Retirement

3 Retirement Plan Investment Strategies (That could help you sleep better)

Sources: Department of Labor , AARP , NEA  , Fidelity

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