Friday, December 14, 2012

5 years to retirement - Financial planning to do list?



I have already transitioned to working very part time instead of full time, but my slightly younger hubby loves his job and plans to remain in it until he has 20 years of service which will bump up his Federal pension a bit. So health willing we are planning to officially "retire" at the end of 2017 when he is 65 and I am 68.

I've been researching advice on what to do in terms of financial planning to prepare for this life change and here is what I've found is recommended for us to do in 2013.
1.       Cash Flow: Write out two budgets – one with current expenses, the other with expected expenses in retirement.
2.       Investments: Use computer programs to project retirement needs and investment returns.  Discuss with a financial planner your goals and how to adjust your asset mix to meet them.
3.       Defined Benefit Retirement Plan: Ask your benefits office to project your pension in monthly and lump-sum payments
4.       IRA & 403b: Put the maximum in your plan.  Wait as long as possible to tap the money so earnings grow tax-deferred.
5.       SS: Check your earnings statement annually.

Some of this makes sense and some doesn't.

1. We have an annual budget and have tracked our actual spending for years. Since we expect to sell our house and relocate it is very hard to come up with an expected budget 5 years down the road. All we can do is continue to save as much as possible while making sure we also live each day fully.
2. I can do this online and will do so.
3. Again, this is available online.
4. We do maximize these and will do so in 2013.
5. Will do.


The bigger question that is unanswerable right now is what will our life be like in 5 years?

Will we both be healthy?
Will our children still live near each other in southern CA so that will be where we will move?
Will we still have elderly parents living on opposite sides of the country?
How will we want to spend our time? Because I have greatly reduced my work hours I am faced with this now.

How do you plan to prepare for your retirement when it is 5 years out - both financially and in terms of a satisfying lifestyle?

11 comments:

  1. My husband and I are realistic that the economy woes have taken any hope of retirement. His three years without employment killed our retirement money..you see we do not believe in taking support from the government. So, in our household we are streamlining, cutting spending, and trying to be smarter about what we do. But, I just paid $50 tax on one I Pad I bought...that is insane! It is going to be tough as we get older...but I know we can do it.

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    1. This long economic downturn has been hard on lots of people. It sounds like you are doing everything you can in the face of what cards you were dealt.

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  2. We are about 15 years out of retirement and feel all we can do is cut expenses and save as much as we can. We certainly don't feel secure with the cost of health care and the state of social security. I think if you husband has a pension, you are both better off than most. Our 'pension' is in our 401K plans...a scary place to be these days.

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    1. It is hard to feel secure about the future costs as they are so unpredictable. Mostly our retirement will be funded by our IRA/403b savings and social security but his pension is certainly going to help. Unfortunately due to corporate changes and health problems I moved to very part time work at 55 and that has impacted our savings a lot.

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  3. We spent our last five working years living on one income and saving the other entirely. We doubled our investment money. Our everyday expenses are now paid entirely by my husband's military pension. I work occasionally and that money is used on travel and kids.... Works for us at 55&62.
    Good luck.

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    1. That is great! Hope you are enjoying your retirement.

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  4. Ah, therein lies the problem: You can do everything "right," but it's the bigger unanswerable questions that keep us up at night. But I have figured out the secret to controlling the biggest potential expense of all, which is health care. And the answer is ... drum roll please: Stay healthy! (And I only wish I was joking.)

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    1. Staying healthy is a key factor - and it would be great if we had total control of that LOL. Doing what we can to be healthy will make the journey better though!

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  5. Im fairly good evidence that "the best laid plans"...and all that. That said, I would add a couple things to the pot, one of which will not apply to you. Like me, you will I assume keep your federal insurance benefits in retirement. But for those who retire from a job before medicare age.........know what you will do. Cobra is very expensive.

    while I realize you will be moving elsewwhere and cannot estimate those costs, there are somethings you can do to get there in terms of non housing costs. Will you still work and need a work wardrobe, do you need to add travel costs in your budget? and so on. I would also figure what will NOT be in your budget such as 401K costs and the like.

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    1. Excellent points and yes, we do plan to keep our federal healthcare benefits. Since I will turn 65 while my hubby is still working and before he is 65 we will learn how to best combine the two plans. COBRA is very expensive.

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  6. Planning your retirement should be done as early as possible. While you still have the strength to earn more, it's best to invest them in your bank accounts, insurances, and other assets. Through this, you'll be assured enough that you won't have any problems to face when it comes to financial stability during your retirement years. :)

    Hortensia Whitworth @ TereoWealth.com

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