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How to Retire in Four Steps

April 17, 2023

There is no one-size-fits-all road map for how to retire, but that doesn’t mean you have to start making plans from scratch. The best-case scenario is one in which you can work hand-in-hand with an advisor who understands your current financial situation and your goals—but even if retirement is a long way off, you can start thinking about your next steps today. Our guide walks you through four of the most common steps that retirees go through when they exit the workforce.

  1. Set Your Intentions

    Only you know how you’d like to spend your retirement, and making a decision about how you want to spend your time is the first thing you should do as you move toward the next stage in life. Whether you aim to spend more time with friends and family, find an organization to volunteer with, or travel the world, your adventure truly begins when you set the intention to make your dreams come true.

    The more specific you can be with your goals, the more likely you are to achieve them. Start by making a list of three to five desires that you have for your retirement, then break those desires down into manageable steps. Create a timeline that you’ll use to guide yourself through the next few years.
  2. Assess Your Health & Determine Your Recurring Expenses

    Certain expenses will tend to decrease when you retire. For example, many retirees downsize to a smaller home or move to a more affordable area in the years after leaving the workforce. However, other expenses may increase—and that’s especially true where healthcare costs are concerned. For that reason, it’s important to assess your health carefully as you start to plan your budget. Take preventative steps now.

    Your Medicare benefits begin at age 65, regardless of when you choose to retire. If you plan to retire earlier than age 65, you’ll need to secure alternative medical coverage that will see you through the intervening years.
  3. Make a Budget & Set a Savings Goal

    Now that you’ve got a sense of how you’d like to spend your money and how your expenses will change, it’s time to start thinking about your monthly budget. Most experts recommend that you try to secure a post-retirement income of roughly 70–80% of your pre-retirement income—but you should make adjustments depending on how ambitious your retirement goals are.

    We’ll account for social security benefits in more detail below, but for now, it’s worth noting that social security benefits will generally only provide an income of roughly 40% of your pre-retirement income. (This number will be lower if you were a particularly high earner during your working years, or higher in the opposite case.)

    Although one in three retirees rely on social security for at least 75% of their post-retirement income, you can set yourself up for a better retirement if you have other
    significant sources of income to draw upon. Among these sources, savings are perhaps the most important.

    How much do you need to save for retirement? Most experts recommend a target of roughly 10 to 15 times your annual pre-retirement income.

    In addition to any savings or social security benefits that you may be able to draw upon, you can also expect income from investments that you’ve made.
  4. Decide When to Claim Your Benefits

    It’s possible to start claiming social security benefits at age 62. However, your monthly payment will be reduced if you start to claim benefits before you reach full retirement age. Full retirement age falls between 66 and 67, depending on the year in which you were born. If you wait to start claiming benefits until after you reach full retirement age, your monthly benefit could be even higher: up to 24% higher than the ‘full’ payment if you wait until age 70.

    At the same time, you should decide what you’d like to do with your existing 401(k). For many, transferring the funds from a 401(k) to an Individual Retirement Account, or IRA, ensures the greatest amount of flexibility in the years to come. We recommend that you work with a financial advisor to find the path that makes the most sense for you.

Let’s Build a Retirement Plan Together

No matter what you’d like to accomplish during your retirement, the advisors at IntentGen Financial Partners can help you reach your goals. Contact us today to start a conversation and learn more about the options you have for your golden years.

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