8 things to consider before you retire

check-listWhile preparing for our weekly radio show, Your Money Matters, which airs Thursdays at 9 am, I came across an article which caught my attention titled “8 things you must do before you retire.” The article started with a time line – What to do 12 months, 6 months, and 3 months out from retirement to make sure you are prepared. To summarize the article, at 12 months out it stated you should dial back on stocks, raise cash, and set a realistic retirement budget. At 6 months out you should play out Social Security scenarios and figure out how you’ll pay for health care. And finally at 3 months out you should begin the rollover process, sign up for Medicare, and get a running start on your post retirement career.1

Now, while there were some things listed that I thought were good sound advice, there were others that made me step back and raise some questions. The first thing that stood out is that the article states that according to the Employee Benefit Research Institute, each day more than 10,000 baby boomers enter retirment.1 Just think of that volume and how it can clog up the systems of health care, Social Security, retirement income replacement, housing, extended care, etc. All you need is to be involved in is helping take care of an aging parent and you will quickly understand the importance for all pre-retires to sit down and make a plan!

So back to the article…One of the first items that I had to disagree with was the statement that at 12 months out from retirement you should dial back stocks. It goes on to say that exposure to the stock market should be limited to 50% in your sixties. I think this is a blanket statement that is way too general to be a guideline for all retirees. I would say the better advice would be to take a closer look at the types of investments and equities that you have. Soon you’ll be concerned with income so look for dividend paying equities. Plus, the article’s blanket statement doesn’t take into effect personal situation, risk tolerance level, spending habits, or life expectancy. If a male in good health is expected to live to be age 83, and a female to age 85 and some may expect even greater longevity, then there may be a longer investment timeline. Adding to that the fact that today’s interest rates are at an all-time low and are projected to remain low for one or two more years. This may not be the best time to jump out of the market and become ultra-defensive.

I think this is the time to sit down and discuss your personal situation with a qualified professional. I would suggest as an alternative approach, to review your equities, evaluate their fundamentals and then build an equity portfolio that is based on high quality multinational companies that pay dividends. I would also say review the winners and losers over the past years and carve out the weak and volatile equities and replace them with ones that are more fundamentally sound.

Another suggestion of the eight that I disagree with is to raise cash. With this I would say “AND DO WHAT?” Folk’s cash is getting you nothing in return. I am not against having cash on hand but let’s have a purpose. How about limiting it to six months to one year’s home budget and then invest the balance. If you focus on investments which can provide income a large sum of cash is not needed – the money can continue working for you far into your retirement years if it is managed properly.

I feel much better about the remainder of the article’s recommendations.

I feel the key to take away is to not let retirement sneak up on you before you are prepared. I feel it is very important to sit down with an advisor and look at your situation. Look at your expenses and goals for retirement, look at your sources of income, look at the risk level that makes you feel comfortable. It’s important to sit down and have the conversation while you are still working so you’ll know you’ll be prepared when your retirement day comes.

Our experience in working with people getting ready to retire is that customization is better than blankets and each individual really needs to understand their objectives verse risk.

If you want to find out your risk number and if you are ready for retirement, give us a call!


“8 things you must do before you retire.” Donna Rosato. Money Magazine. 10/7/2014. http://finance.yahoo.com/news/8-things-you-must-do-before-you-retire-190603086.html,
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