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Are You Retirement Ready?

Your whole working career is heading to one focal point – the day you retire. It’s a big day, full of uncertainty and mixed emotions. What will you do with your newfound freedom? How do you prevent yourself from going stir-crazy? And, probably most importantly, do you have enough money? Are you retirement ready?
It may actually be impossible to give a concrete answer to that last question because even the best-laid plans can strike unsurmountable difficulties. But we can prepare our best for retirement by using a checklist to prepare for a wide range of scenarios.

How will you live your retirement life?

Some people go into retirement expecting they’ll just float around each day, doing as they please, and be happy. After thirty to forty years of work, that may seem appealing, but it won’t last long. You’ll suddenly have so much free time you won’t know what to do with it. So, start shopping around for new hobbies and reasons for existing.
Take into account where you’ll be living. Picking up mountain climbing as a hobby won’t do you much good in Florida, for example. Also, do you plan on traveling much? Or spending as much time as possible with the grandkids and family? You may even consider getting a new job that you truly enjoy to fill in the gaps.

Understand your Expenses

Retirement tends to radically alter your spending habits. Naturally, some costs may decrease, like commuting expenses, while others, like medical or leisure costs, may increase dramatically. Misestimating these expenses may result in undersaving and financial insecurity or over saving and needless sacrifices today.
There are also specific costs you should consider when planning your retirement budget. These include potential financial support for family members, vacation costs, occasional large payments (like weddings or new cars), existing debts like mortgages, and costs previously covered by employers, like health insurance.
Speaking of health insurance, medical costs usually only increase as you age. From routine doctor visits and prescription medications to potential hospital stays and long-term care, healthcare costs can quickly add up. According to a study by Fidelity, a 65-year-old couple retiring in 2023 can expect to spend an estimated $315,000 on healthcare costs throughout retirement. This figure excludes the cost of long-term care, which can be substantial.
Being proactive with a healthy lifestyle can go a long way, but you still must plan for the possibility of a long-term stay in a nursing home. Look into ways to fund such scenarios so you don’t break the bank if something does go wrong, such as a Health Savings Account or Long-Term Care Insurance.
Also, it’s crucial to have a rainy day fund for emergencies. This fund will reduce the chances of you having to dip into your retirement funds unnecessarily.

Calculate Your Retirement Income

Now that you know your expenses, you need to confirm that you can pay for it all were you to retire today. You may want to delay retirement if you’d be in the red or uncomfortably close. Alternatively, you can downsize or move to a cheaper part of the country or even the world.

Personal Savings and Investments

This is the nest egg we constantly refer to: the funds you’ve diligently saved and invested over the years, whether through a 401(K), IRA, or regular brokerage account. A financial advisor can sit down with you and help you determine how long your nest egg will last with a customized withdrawal plan while factoring in your other sources of retirement income.

Social Security

Social Security will be a significant portion of retirement income for many Americans. The amount you’ll receive depends on various factors, including your earnings history and the age at which you start receiving benefits. You may want to delay taking benefits from social security until full retirement age to fully utilize it over your lifetime.

Rental income

If you own rental properties, the income you generate from these properties can also contribute to your retirement earnings. However, managing rental properties can sometimes be challenging and time-consuming, so some people opt to hire a property management company.


If you’ve worked for an organization that provides a pension plan, such as the fire department or a public school, it can be a significant source of income during retirement. The amount you receive often depends on your salary and length of service. Depending on your overall financial situation, there are strategies to roll your pension over and let it earn money for you while you start utilizing other sources of income.

Plan for Taxes

Your various accounts and sources of income will be taxed at different rates. Some will be short-term capital gains, some long-term capital gains, some as regular income, while others may not be taxed at all! Sitting down with a CPA and Financial Advisor team (our strategic advantage at Walters – we’re both!) well before you retire is vital to ensure you keep your taxes as low as possible. Often, Americans are surprised at the enormous tax bills they receive yearly that deplete their savings much faster than expected.

Roth Conversions

Converting a traditional IRA to a Roth IRA involves paying taxes on the amount converted, but it can provide tax-free income in retirement. This strategy is especially beneficial if you expect to be in a higher tax bracket in retirement than you are now.

Manage Withdrawals Strategically

The timing and sequence of your withdrawals from various accounts can significantly affect your tax liability. For instance, you might want to draw down taxable accounts first to allow tax-advantaged accounts to continue growing. However, the optimal strategy depends on your circumstances, including your projected income, the size of your various accounts, and your expected tax rates during retirement.

Plan for Required Minimum Distributions (RMDs)

Once you reach age 72 (or 73, depending on your birthday), you generally must start taking RMDs from certain retirement accounts, and these withdrawals are typically taxed as ordinary income. Failing to take these distributions in time can result in steep penalties. If you don’t need this money for living expenses, you might consider reinvesting it or donating it to reduce your tax burden.

Estate Planning

Many Americans believe Estate Planning is only for the fabulously wealthy, who have properties and bank accounts overseas and a family name stretching back hundreds of years. But let’s be clear – you shouldn’t go into retirement without an estate plan in place, regardless of your net worth.
In fact, a trust can easily save you more than the cost of setting it up in the first place, so you can consider it as a long-term investment that can shield your estate from creditors and the IRS. Plus, you don’t want to retire without clear beneficiaries or a carefully selected person or people to manage your financial and legal affairs and medical decisions if you become incapacitated. At the bare minimum, you should have a will to distribute your assets according to your desires.
Without these pillars in place, you’re leaving your estate’s future uncertain. Hence, before stepping into retirement, it’s vital to have a solid estate plan ready to give you and your family peace of mind.

In Conclusion

The concept of retirement isn’t just about relaxation or idle time. It’s about finding purpose and engagement in new hobbies, activities, or even work that brings you joy. Consideration for where you’ll live, your lifestyle, and your proximity to family and friends is essential. After all, you want your retirement to align with your vision of an enriching and fulfilling life.
However, you need to be able to pay for it all! So, ask yourself, are you retirement ready? Do you have a tax and estate plan in place, a flexible withdrawal strategy worked out, and healthcare solutions on standby if you’re to get ill or injured?
If you cannot say yes to any or all of those, then we invite you to click the button below to start your journey to a stress-free retirement.

About the Authors

  • Douglas Walters

    Doug is the Managing Partner of Walters Strategic Partners, LLC, a licensed Registered Investment Advisory firm. Doug is a licensed Certified Public Accountant (CPA) in the state of Florida and holds a Series 65 Investment Advisor Representative securities license. He is also a member of the AICPA. With over 28 years of experience as a CPA, he believes investment decisions should be based on decades of peer-reviewed research rather than relying on the latest “hot tip” from media outlets. This empirical evidence puts the science of investing to work for his clients.

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  • Jose Joia

    Jose M. Joia is a Wealth Advisor at Walters Strategic Advisors, LLC. As a member of the team, Jose’s responsibilities involve comprehensive wealth management, planning and customer service. He has over 6 years of industry experience specializing in planning and solving unique issues his clients encounter. Jose has experience serving individual clients, business owners and non-profit organizations.

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