Five Steps to a Less Stressful Retirement Transition

Kathy Longo, CFP®, CAP®, CDFA Tuesday, 07 March 2017

Five Steps to a Less Stressful Retirement Transition

Many of us look forward to retirement as a time for relaxation, exploring hobbies and using our time to focus on things other than work and career. Planning for retirement, however, can be stressful even in the best situations and downright daunting for people nearing retirement who may not have planned as much as they’d have liked. According to a 2016 PwC survey, a little less than half of Baby Boomers know how much income they will need in retirement and are concerned that they will run out of money.  That kind of uncertainty compounds the stress that many people often face when trying to save and prepare for retirement.

Visualizing your retirement is one way to give yourself peace of mind about how to achieve it. The following five steps can help you create a successful and fruitful financial plan.

    • Setting goals – Setting a goal is about more than choosing an arbitrary number to shoot for. You should give thought to the lifestyle you’d like to live in retirement, and be realistic about how much that lifestyle will cost. Also, be sure to consider any financial support you intend to provide to children or grandchildren, including support you choose to provide while you are alive as well as anything you might like to leave in your estate plan.  Goal setting is also a great opportunity to ensure both partners have the same vision for retirement.

    • Spending Plan – Success in reaching your goals will largely depend on the next two steps. Having a well thought out spending plan will help you establish financial goals and provide accountability to help control your expenses and live within your means. Keeping close watch on your spending and reducing debt are important considerations to set the stage for living comfortably in retirement.  It is also important to consider how expenses will change in retirement.  Many assume that expenses will drop in retirement, but we often see expenses rise as you now have an opportunity to travel or participate in new activities with your newfound time.

    • Saving – Saving is the second important step to reach your retirement goals. Your spending plan and your saving plan need to work hand in hand. Obviously, you can only save money you don’t spend. Building a prioritized line item for monthly savings directly into your budget will help you stay on track with your planning goals. Don’t underestimate the power of savings to build a nest egg as you prepare for retirement.

    • Social Security – It would be a mistake not to give Social Security much thought until the day you make your filing decision. It is important to consider all of the claiming options prior to making the decision about how and when you receive your benefits. If you are married, it is even more important to plan ahead. The decisions you make can negatively impact a surviving spouse in the event of your passing.  Thinking about Social Security sooner rather than later can help you make a decision that will maximize your benefits and provide an added layer of protection as you age.

  • Tax planning – Many retirees find it difficult to determine which accounts to use towards living expenses as there are various tax consequences depending on the type of account. At age 70 ½ you must begin taking withdrawals from your retirement accounts. If you plan to retire before reaching age 70 ½, strategically using retirement accounts earlier may help minimize taxes. Overall, it is important to come up with a tax efficient plan to use your assets along with income sources such as social security.

Confidence and peace of mind about your retirement comes from thoughtful planning and preparation. Guidance from a financial advisor can help you define retirement goals and build a plan to follow these five steps to success. A skilled and experienced financial planner can help you work through many of the challenges that make retirement planning stressful and put you on a smooth path toward the financial future you want to achieve for yourself and your family.

About the Author

Kathy Longo, CFP®, CAP®, CDFA

Kathy Longo, CFP®, CAP®, CDFA

Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.


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