Budgeting for Retirement

Budgeting for Retirement

In this video, we walk through a few tips for each different phase of retirement.

Retirement can lasts decades and at Client First Capital, it is our goal to make sure you are financially prepared for what is ahead. Retirement is typically seen as a succession of phases with different goals, spending priorities, and budgeting needs. In this video, we walk through a few tips for each phase.

Phase 1: Pre-Retirement
This is between the ages of 50 to 62. During this phase, you are still working, but retirement is approach. At CFC, we created a Next Decade Workbook which is a guide to help you plan for the future – tying together your personal goals and values with your financial plans to make sure they all align. Together, we walk through this workbook to create your financial strategy for the next year and beyond.

Phase #2 – Early Period of Retirement (62 to 70)
This falls between ages 62 to 70. This might be a big adjustment period for you as your income changes and you have a lot more free time. It is important to balance your budget with your goals and plans for your retirement. This is also a time to review your safety margin for how much you want to have left at the end of retirement and make sure you are staying on course.

Phase #3 – Middle Retirement
This falls between ages 70 to 80. At this point you have a consistent schedule set for your retirement days and are enjoying your free time. At age 72, you will have to start taking required minimum distributions from certain types of retirement accounts: profit-sharing, 401(k), 403(b), 457(b), and Roth 401(k) plans, as well as most types of IRAs (but not Roth IRAs). This is a good time to revisit your asset allocation and distribution strategy and make sure your downside risk appetite matches what you are comfortable with. You should also revisit your will and estate plan and make sure they are all up to date with your wishes.

Phase #4 – Late Retirement
Once you hit 80, you are in Late Retirement. You will likely have increased medical expenses and healthcare costs. We typically find that the biggest cost during this phase is for care. Having a Long Term Care plan is critical to making sure you and your family are taken care. You will also want to look into Charitable giving and gifting to take advantage of tax credits.

If you are working with a Financial Advisor that is not connecting the dots between your spending, financial goals and the different phases of retirement, please reach out. We would be happy to have an initial conversation with you to make sure you are set up for success. You can connect with us by sending an email or filling out our contact form.