Northwestern Mutual

Steps for Success

Nine Steps for a Successful Transition into Retirement

As you transition from saving for retirement to spending in retirement, it's up to you to determine how to turn your accumulated assets into a steady paycheck that will last a lifetime. And it's not nearly as simple as taking the money out as you need it. 

Success hinges on having a strategy to make your money last as long as you do, which includes taking steps to:

  • Get specific about retirement.
    Describe on paper your idea of a perfect retirement. If you have a partner, it’s a good idea to compare notes to help ensure your goals and desires for retirement are in sync.
  • Practice retirement.
    Use time off from work to explore new hobbies, visit potential retirement communities and test-drive what it feels like to live your retirement dream.
    Medicare Simplified white paper: Know your options, know your costs
  • Create a retirement budget.
    Calculate your needs (essential expenses) and wants (discretionary expenses) to determine exactly how much money you’ll need to live on; then identify your sources of retirement income. The goal is to match your essential expenses with guaranteed sources of income.
  • Research Medicare and other health care options.
    Also review your long-term care protection arrangements. This is especially important if you plan on retiring early.
  • Review and update your estate plan.
    Update the beneficiary designations for your insurance and investment accounts and retirement plans. Also review your will and/or trust and your financial and health care powers of attorney.
  • Fine-tune your asset allocation.
    Make any needed adjustments to ensure your portfolio continues to reflect your risk profile and life expectancy.
  • Position your assets for retirement.
    Where your assets reside prior to retirement can contribute to the success of your retirement income plan. Consider the tax-deferred benefits of options such as IRAs and deferred annuities.
  • Decide how and when to take Social Security.
    Every person’s retirement plan is different, so the choices you make about Social Security should be unique to your circumstances. Those choices will have a significant impact on the amount of your benefit and potentially, on your ability to reach your financial goals in retirement. 
  • Establish a cash reserve.
    A cash reserve is an account that typically contains enough money to cover your living expenses for about two to three years so you may avoid having to sell your investments or withdraw from your other income sources at inopportune times.

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