How to Prepare for Retirement: A Checklist for Pre-Retirees

As you approach retirement, there are several factors that will shape how you save, plan, and manage your finances. From your income preferences to your spending habits and portfolio structure, here are key areas to consider to help secure your financial future and retire with confidence.

Your occupation can significantly influence your identity and lifestyle. Do you plan to continue working after reaching retirement age? Continuing to work may provide both financial benefits, like maintaining a paycheck and delaying portfolio withdrawals, as well as non-financial perks, such as socialization and mental engagement.

How will you manage your portfolio and generate income during retirement? Some individuals prefer flexibility, while others prioritize a steady, predictable stream of income. Determining your income style is crucial, and tools like the RISA (Retirement Income Style Awareness) matrix can guide you in developing a tailored retirement income strategy.

Social Security is a critical element of your retirement strategy, but it won’t replace your full income. Your claiming strategy should be carefully planned, as factors like marital status and total income will influence your decisions. Maximizing your benefits through delayed claiming can significantly increase your monthly payouts, helping reduce your need to dip into other savings.

Transitioning from accumulating to spending your retirement savings can be one of the most challenging aspects of retirement planning, even for seasoned investors. After years of diligently saving, shifting your mindset from growing your wealth to using it can feel overwhelming. The key is to approach withdrawals strategically by establishing a withdrawal plan that ensures you don’t outlive your savings while still maintaining your desired lifestyle. A common strategy is to implement the 4% rule, where you withdraw 4% of your savings in the first year of retirement and adjust for inflation in subsequent years. However, this method may not suit everyone, especially in periods of market volatility.

It’s also important to consider the sequence of withdrawals, and whether you will tap into taxable, tax-deferred, or tax-free accounts first. This can impact how much you retain after taxes, and withdrawing from certain accounts too early may lead to penalties, while delaying others could increase your tax liability. Additionally, you’ll want to remain flexible. Your spending needs and market conditions may change throughout your retirement, so your withdrawal strategy should be adaptable to account for these factors. Monitoring and adjusting your spending and withdrawals will help preserve your portfolio and ensure you have enough to cover both your essential and discretionary expenses for years to come.

Having the right portfolio structure is vital as you enter retirement. This phase of life requires balancing growth with protection to ensure that your assets last throughout your retirement years. Your portfolio should be structured with both income generation and risk management in mind.

As retirement approaches, the risk of outliving your assets becomes more significant. A well-structured portfolio ensures a balance between income generation and protection against market volatility. By aligning your portfolio with your risk tolerance, income needs, and longevity goals, you can create a sustainable financial plan that supports your desired lifestyle in retirement. Structured portfolios provide peace of mind and flexibility, allowing pre-retirees to enjoy their retirement without financial uncertainty.

Approaching retirement is an exciting milestone, but it requires careful financial planning to ensure long-term stability. By addressing key areas such as your income style, Social Security strategy, and portfolio structure, you can create a robust financial plan tailored to your retirement goals. A well-structured portfolio is particularly important, as it balances growth and protection, providing the financial security needed to enjoy your retirement years with confidence. Taking the time to plan now will help you navigate the transition into retirement while knowing your future is secure.