Part 1 of this article addressed how to think about retirement post college and during your child-rearing years.
During Your Peak Earning Years at Work
As you mature in your career, you will encounter a variety of opportunities. After having spent 20+ years in the workforce you are likely commanding a good salary – perhaps the highest you’ve ever earned. These are your “peak earning years,” and though there are many benefits there are also new financial challenges. Older children might mean college tuition; aging parents might require more frequent visits. Even your own aging body may require a little more health care attention.
If you haven’t already, now is the time to meet with a financial advisor to help you determine what sort of future income you’ll need to meet your retirement goals. It may also be time to take advantage of any IRS catch-up contributions – if you’re over 50, you are allowed to contribute up to $24,000 to your employer-sponsored plan (as opposed to $18K for those under 50).
Getting Ready to Retire
When you start to close in on your retirement date, it will become necessary to think about and plan for how you will draw down your retirement assets. Your certified financial advisor can help you adjust your investment allocations with an eye towards protecting assets, though it’s still important to pursue some growth to keep up with inflation and the rising cost of living. A good financial and retirement planner will help you assess and address:
- The cost of living and tax rates in your desired retirement location
- Future health care needs, plus any supplemental retiree insurance you may need to purchase
- Any income-producing investment vehicle currently in your portfolio
- Any part-time work or other sources of post-retirement income
- Estate planning
Your retirement planning professional will also familiarize you with the required minimum distributions (RMDs) that the IRS imposes when you begin drawing down on your retirement assets.
You will face financial challenges throughout your life and career that have an impact on the quality of your retirement. Make sure you consider retirement whenever you are reviewing your other savings and investment strategies. Once you have a financial planner you trust (one who is working in your best interests and not simply trying to earn a commission) have them review your plan’s portfolio at least once a year and whenever a major event such as marriage, divorce or the birth of a child occurs.