Preparing for retirement is a daunting task no matter how close or far you are from making that life changing decision.

For young adults it seems so far away that it's not worth a thought. Yet, the money contributed to a 401(k), Roth IRA, or traditional IRA in those first years of work provides the best chance for growth, through compounding, and lays the foundation to generate retirement income forty or so years later.

But the closer you may be to retirement the more questions arise in how exactly to prepare.

In a recent article there are 5 steps that can aid in preparation:

  1. Create a spending plan/budget: figure out your retirement monthly income and if it covers your living expenses. You may be able to adjust your income in retirement but it is much easier to adjust your expenses.
  2. Examine the benefits of rolling over your 401(k): rolling over your funds into an IRA usually provides the best opportunity for more control over how you are invested, flexibility in adjusting your investments and investment strategy, and more transparency. Work with an advisor to understand the process of rolling over your 401(k) and how you would invest to meet your needs.
  3. Review your portfolio with an advisor: the money you have worked so hard to earn was growing and now you need it to work for you. Talk with an advisor about how your investments can meet your income and spending needs and be sure you understand and are comfortable with the strategy in place. The more comfortable you are the more likelihood you have of sticking to your plan when a bumpy market inevitably comes along.
  4. Choose when to take Social Security: work with a professional to figure out your full retirement age, for most it is 66, when you are first eligible to take the benefit, usually at 62, and how your income benefit can vary depending on when you elect to take it.
  5. Enroll in Medicare: if you start receiving social security before age 65 you will automatically be enrolled in Medicare Part A and Part B when you turn 65. Make sure you sign up before age 65 or there can be a delay in coverage with potential late penalties. Work with a professional to ensure your medical expenses are sufficiently covered.
The time you take to prepare for your retirement is an investment that you will live with for the rest of your life. By working with an advisor you can create a plan that is realistic, work to achieve that plan, and enjoy the fruit of your labors. No luck here, just thoughtful planning, and hard work.

Caroline Hill, Financial Advisor


(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).