The COVID-19 pandemic has many near retirees re-examining their retirement dates. Here at Wingate Wealth Advisors, we’ve seen an increase in retirement planning services as more clients ask whether they must go back to the office at all post-pandemic, wary of whatever the new normal will be. Whether you have been offered an early retirement package that accelerates your retirement plans, or the pandemic uncertainties have caused you to seriously consider retiring sooner rather than later; a financial plan is the necessary first step to help you decide. Here are some things to consider if you don’t want to go back to the office.
Start with the present to plan for your future. Take stock of where you stand right now in terms of assets, liabilities, income and cash flow. Many people find themselves overwhelmed by a collection of accounts and old retirement plans scattered among custodians. Pull your assets together and understand the tax character and rules that apply to each type of account you have. Same with current and future sources of income, including your options for Social Security and pensions.
Once you understand the what and where of your resources, begin planning how to replace your employment income. Maximizing your withdrawal strategy at the start of your retirement can prevent you from running out of money later in life. Short-term and long-term income projections will help you plan and provide for low-income years. Uncertain income will likely cause anxiety when your paycheck ends and you begin spending the money you’ve accumulated over your lifetime. But, don’t overlook the opportunities that fluctuating income provides, such as Roth conversions and other types of tax planning. Choosing how much to withdraw from each type of account you have requires a long-term strategy for managing your assets and taxes. Once Required Minimum Distributions (RMDs) and Social Security begin, your ability to manage income and tax brackets diminishes. Plan today’s withdrawals with tomorrow’s tax rates in mind.
While every retirement plan depends on the individual, some themes and concerns continually reveal themselves to us as we help hundreds of retirees. Take time to envision your retirement, what you want to do and how much it will cost. Try to anticipate “surprise” expenses that can jeopardize your retirement. Don’t let an unexpected medical, dental or home improvement bill prevent you from wintering in a warmer clime. Understand how the timing of cash flow demands from your portfolio, both expected and unexpected influence your asset allocation. Don’t be forced to sell stocks during a market correction to raise cash for your living expenses or an unpleasant surprise. Your asset allocation (how much cash, fixed income and equities are in your portfolio) should continually balance your short and long-term goals while allowing you to sleep peacefully at night.
Are you willing to make sacrifices to retire early? Be realistic about what can be sacrificed, considering that you will have a lot of time to fill once you stop working. Be flexible and understand the trade-offs when altering your retirement goals and expectations. Know the true cost of hastening or delaying a goal to your cash flow and the success of your financial plan before you begin making those choices. Engage in a robust round of “What-if” planning that includes good and bad stock market scenarios and allows you to explore plenty of alternatives. The more options and flexibility you have, the happier your retirement will be.
This article highlights some important considerations which may seem overwhelming if you have never seriously considered retirement or worked with a professional before. Our team of Financial Planners is happy to help you answer these questions while carefully balancing your short and long-term needs and goals for your retirement. They will guide you through an engaging and thoughtful process from start to finish using technology that allows “what-if” scenario planning in real time. Contact Wingate Wealth Advisors to schedule your free consultation with a Certified Financial Planner™ professional.
Written by Andi McNamara, CFP®
Director of Financial Planning at Wingate Wealth Advisors