Retiring in 2024? 5 Steps To Take Now

A new year has recently begun! That’s always a time to think about new beginnings. But what if your primary new beginning for 2024 is retirement?

In times past, people often thought of retirement as the end. Instead, our financial advisors in San Antonio, Texas think of it as an opportunity to PIVOT™ – to turn to the goals and plans you want to accomplish in your retirement years. 

What should you do now if you plan to retire this year? Here are five important steps to take.

1. Review your goals and needs with a financial advisor

Whether you’ve been working with a financial advisor consistently or have never worked with one, now is a good time to sit down and review your goals and needs in retirement with a financial advisor.

Financial advisors always factor in goals as a central component of financial planning, and at no point is that more important than retirement. If you want to travel extensively in retirement, after all, that implies a quite different set of plans and expenses than someone who wants to stay put and work in their garden. The financial road map to reach goals always needs to have as its endpoint what the goals are! 

You need to have a realistic sense of what your needs will be in retirement as well. A financial advisor can help you plan your retirement budget vis-à-vis your anticipated income and make sure all your needs will be met.

A strong financial plan for retirement should also make sure you are positioned to handle any later life challenges, such as a serious illness or the death of a spouse, with adequate cash reserves.

2. Review your anticipated income and expenses

Knowing your anticipated income and expenses is one of the crucial foundations of good financial management. You need to make sure that there is a comfortable fit where your income is adequate for your needed and desired expenses. A financial advisor can help you plan out your income from all sources, including any retirement plan savings such as 401(k)s or Individual Retirement Accounts, Social Security, pensions, and other expected sources of income.

You can also plan your retirement expenses. We can help you review which of your current expenses may stay the same, which may decrease, and which may rise. If you’re no longer commuting to work, for example, your transportation costs may fall. But if you’re traveling to see grandchildren, your travel expenses may rise.

A review of expected income and expenses in retirement can enable you to make any necessary adjustments to ensure that you have enough money to comfortably meet your needs.

3. Create a portfolio strategy for retirement

Investment and retirement portfolios are usually divided among asset classes. Common asset classes are stocks, bonds, and cash. Others are commodities such as gold, closed-end funds, art, real estate, and alternative investments. 

All asset classes have a risk-reward profile which is used to maximize returns while moderating risks. Stocks, for example, are higher risk than cash, because the price of stocks fluctuates, and stocks can have up and down years. Cash placed in a savings account or cash instruments like certificates of deposit (CDs) do not fluctuate but are very stable in price. 

Generally, retirement fund assets are diversified to maximize reward and keep risk in line with a client’s risk tolerance. As a younger person, you may have had a higher percent allocation in stocks to maximize market returns over time, and a smaller percent allocation in cash to create some stability of your funds. 

But once you’re in retirement, your exposure to risk and reward may need to change. The investments of a 25-year-old have several decades to recover from a bear market. (A bear market is defined as a decline of 20 percent or more in the broad market averages.) But the effects of a bear market on the investments of a 70-year-old can be very negative and may cause them to lose the money they need to live on. 

As a result, your retirement portfolios may need to be reallocated before you retire, to lessen any investment risk from volatility. You may also need to diversify your investments more, to maximize stability. 

4. Perform a risk assessment for retirement

Insurance protects us against risk to our assets. That’s a chief reason you have home and car insurance, for example. Should anything happen to these assets, you will be able to repair or replace them.

As you retire, your financial advisor should perform a thorough risk assessment to pinpoint all your insurance needs. Older people need health insurance, for instance, because the price of health care is high and most people’s health care needs increase as they age. Disability and long-term care insurance may also be advisable. If you have dependents, you should have life insurance. 

5. Consider estate planning

Estate planning refers to several activities. First, it’s the planning for the disposition of your assets after you pass away that can be done either with a Last Will & Testament or with a trust. It’s important to have these documents because the lack of them can cause both financial and emotional strain and stress on your family members in a time of grief.

Estate planning often also includes naming a person you want to have power of attorney over your financial and health care decisions should you become too incapacitated to make these decisions.

While it may be decades before you need these documents and decisions, it’s always prudent to be prepared. The beginning of retirement can then take place with more peace of mind.

Contact Pax Financial Group for a Retirement Checkup

At PAX Financial Group, we are fiduciary financial advisors who recommend plans and strategies based on what’s best for you. We offer biblically responsible investing (BRI) to those investors who wish to harmonize their financial planning with their beliefs. We offer a retirement checkup to cover your plans and goals for retirement. We can meet either by phone or in our convenient San Antonio, Texas office. Contact us to discuss your retirement and the next exciting stage of your life.

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Biblically Responsible Investing (“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. PAX Financial Group has conducted due diligence for their Biblically Responsible Investing (BRI) process and proudly serves as each client’s advocate using fully vetted third-party specialists for the administration of BRI methodology. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product and should not be relied upon as such.

Ready to have a real conversation about securing your future?

Schedule a free no-strings-attached phone conversation.