A Retirement Checklist for Baby Boomers

Retirement Checklist

You’ve spent the past few decades building a career and raising a family. Along the way, you may have accumulated a substantial number of assets. Now retirement is quickly approaching, and you’re wondering if you’re as prepared as you need to be.

Many baby boomers measure their preparedness in terms of assets. They’re trying to hit a certain number or account balance. Asset accumulation is an important part of retirement planning, but it’s not the only component. There are a few other steps you need to take to make sure you’re ready to leave work behind and enjoy a stable and comfortable retirement.

Below are four key planning steps to help you become fully prepared for retirement. If you haven’t implemented these steps, now may be the time to do so.

Prepare a budget

Are you one of the 68 percent of Americans who don’t use a budget? If so, now may be the time to start. A budget is always a helpful tool, but it’s especially powerful in retirement. It helps you see where you’re spending your money, how much money you can afford to spend and what adjustments you should make.

Prepare two budgets. One should be for the remaining years until retirement. Look for ways to cut spending while maximizing saving. The other should be for after you retire. Think of ways to live the retirement you’ve dreamed of while also staying within your income. It may be difficult, but just the act of preparing a budget can help you get a better understanding of your financial situation.

Project your income

Your budget will help you get a better understanding of your spending. However, you also need to understand your potential retirement income. Most retirees generate income from some combination of the following three sources: Social Security, employer pensions, and personal savings and retirement plans.

Take a look at all of those sources and project your potential income from each. Social Security has an income estimator tool on its website. Your employer should be able to get you a pension benefit projection. And your financial professional can help you project a safe, conservative distribution amount to take from your savings.

Compare your projected income with the expenses from your retirement budget. If your expenses exceed your income, you likely still have some preparation work to do. You’ll need to either save more money or rethink your retirement spending.

Plan for long-term care

According to the U.S. Department of Health and Human Services, the average 65-year-old has a 70 percent chance of needing long-term care in retirement.2 That means it’s very possible that you or your spouse may need care either in your home or in a facility at some point.

As you might guess, that care can often be expensive. It’s usually not covered by Medicare, and it’s covered by Medicaid only after you’ve depleted much of your assets.

Develop a plan to pay for long-term care. It may come in the form of a long-term care insurance policy, which will cover some or all of the monthly costs, depending on your policy specifics. These policies can have many variables and moving parts, so be sure to discuss them with a knowledgeable professional.

Increase your guaranteed retirement income

You’ll likely benefit from some level guaranteed lifetime income in retirement. For instance, you will receive income from Social Security and possibly even a pension. Guaranteed income is helpful because it gives you certainty and predictability. You know you can count on that income no matter how long you live or what is happening in the financial markets.

You may want to look for opportunities to increase your guaranteed income. One potential strategy is to use an annuity. You can use a single premium immediate annuity (SPIA) to convert some of your savings into an income stream that is guaranteed for life. The income amount is based on your life expectancy and the amount of money you contribute.

Another strategy is to use a variable annuity or fixed indexed annuity that has a guaranteed lifetime withdrawal benefit. Your funds have growth potential, but you can also take a withdrawal every year. As long as your withdrawal never exceeds the allowed amount, the income is guaranteed for life, no matter how the annuity contract performs.

Ready to finalize your retirement plans? Let’s talk about it. Contact us at America’s Annuity. We’re happy to help you and your spouse improve your retirement preparedness. Let’s connect soon and start the conversation.