Cary Grant’s Retirement Income Checklist
“You never miss the water until the well runs dry.”
His Girl Friday (1940) – Walter Burns (Cary Grant)
In the 1940’s movie His Girl Friday, Cary Grant’s character of Walter Burns reminds us that nothing lasts forever. Many baby boomers now approaching their retirement timeline, have begun to realize that shortly they won’t be bringing home a bi-weekly paycheck.
But the well isn’t dry. Often I urge my clients to create a checklist to help understand what their monthly retirement income will be when they decide to retire.
Retirement signifies the end of person’s fixed income. It does not mean that an individual’s life and interests are over. How might you free up enough money to purchase that boat? Is there a way to travel to those places you have always wanted to experience?
The first step is to have a clear vision of your retirement income potential. Let’s evaluate what current assets you now own, and how they might become additional monthly income during your retirement years.
Silver Screen Income Planning Retirement Check List
Before planning on your retirement dream home, or second home, it is essential you understand what your monthly retirement income will be. To estimate this amount and where your money will derive from, make a listing of the following income assets:
- Social Security
- 401K Accounts
- IRA Accounts
- Pension Benefits
- Annuities & Insurance Assets
- Bonds & Stocks
- Other tangible assets. (Housing, Investment Property, Business Property, etc.)
Needless to say, covering all of these income sources would be a lengthy endeavor. In this post, I want to talk about retirees’ top three monthly income assets: Social Security, 401(k) plans, and your housing.
To understand your monthly Social Security benefit, you can check your current earnings at the Social Security Administration website. Deciding when to claim your benefit and at what age is essential to maximizing your principal monthly income resource during retirement.
At age 62, you are allowed to take your Social Security benefit. Yet, if you delay taking your benefit, it will grow every year until you reach age 70. Postponing retirement gives you time to build a bigger nest egg. Tabling your retirement also delays withdrawing your retirement capital.
Numerous financial advisors will recommend waiting until full retirement age, which is 66 for people born between 1943 and 1954. Before opting to take your Social Security benefit, it is best to discuss this with an expert who specializes in Social Security. Once you choose to take your Social Security benefit there is no way to change your options, so make sure you are opting for the best choice before making a permanent decision.
If you have a workplace 401(k), this will most likely be part of your long-term monthly income plan. You may need income from this fund at retirement age. Some people do not. 401(k) accounts require minimum distributions by the time you reach age 70-1/2. If you do not need to tap these cash assets at age 70 and ½, you can delay withdrawals while enjoying your tax-deferred benefit by working for pay. Rules only permit this if you are not a corporate owner with more than a 5% share in the company that employ’s you.
Housing: Moving Out of Beverly Hills
When planning for retirement, one of the shrewdest strategies to create more income is to lower your housing expenses. But take caution. Trading down or downsizing without professional advice can sometimes reduce your standard of living and not necessarily your monthly payments.
Do you currently carry a mortgage? A Consumer Financial Protection Bureau Report from May of 2014, reveals that 30 percent of homeowners over the age of 65 still are making a monthly mortgage payment. The same survey reports that 8.4 percent to 21.2 percent over age 75 make a monthly mortgage payment.
One way to diminish monthly housing is to sell your home and rent. Others choose to sell a larger home and repurchase something smaller.
Of course, the first step to selling a home is to engage a professional appraisal and calculate how much cash value you currently have in your home. The second logical step is to understand how renting or downsizing will affect your monthly expenses. For example, if you relocate to a condo, be careful to evaluate the association that governs it. Have they recently made capital improvements? If not, you might take a hit with a capital upgrade assessment. If you downsize to a smaller or newer home, what is the monthly property tax burden?
Active Adult Community
Some retirees consider buying or renting housing that is located in a 55+ community. Most of the time these establishments offer group activities and attractive amenities. Monthly housing costs of active-adult communities vary depending on the area they are located in, size of the home, and amenities.
Consider association costs of these communities and perhaps create an expense projection for living within them projecting for ten years or even twenty years to understand what actual costs may be.
Having enough income to retire like Cary Grant takes careful planning. Even Cary Grant would agree that he needed an experienced director to shine upon the silver screen.
Likewise, consider making an appointment with a financial advisor that specializes in retirement. Investment planners are not necessarily retirement advisors. Your long-term investment financial advisor is not a retirement expert.
Retirement advisors offer tools to make a complete checklist of retirement income and can provide planning for health insurances, and other monthly expenses that you may not have considered as part of your list.
To discuss your retirement risk list with a financial advisor, contact us for a free consultation at Secured Retirement Financial. Our goal is to help our clients preserve and protect their wealth through offering comprehensive financial planning.
Ready to Take The Next Step?
For more information about any of the products and services listed here, schedule a meeting today or register to attend a seminar.