Nearing Your Next Act

Even if you plan to retire soon, you’ll want to continue saving. Set up a retirement income plan to ensure you’ll have a steady stream of income during retirement. Talk with an estate lawyer about ways you can create a legacy for your family.

By Catey Hill

Look back at all you’ve accomplished — the children you raised, the home you bought and renovated, the career you created — and pat yourself on the back.

Now it’s time to reward yourself with the retirement you’ve been planning. Use this checklist to help you along:
Don’t stop putting money away just because you’ll be retiring soon.
  • Meet with a financial advisor
    As you near retirement, a financial advisor can be extremely helpful, helping you create a retirement income strategy and stretch your savings.

  • Total up your anticipated retirement expenses
    You should now have a pretty good idea of how much you plan to spend to pursue your passions, such as travel.

    Use the Wells Fargo Expenses and Income Needs list to project what you’ll spend in retirement. Then look for ways to trim those expenses.

  • Finalize your retirement income plan
    Look through your retirement income plan, making sure that you’ve included all your expected income sources (Social Security, pension, savings plans, investments).

    Then make sure the plan will provide enough income each year to cover expenses plus some extra cash for fun or the unexpected.

  • Develop a withdrawal strategy
    Now that you know how much savings you have and how much other income is likely to be coming in, figure out how much of your savings to withdraw each year and which accounts the money should come from.

    The Wells Fargo Income in Retirement pages will help you figure out what’s right for you.

  • Keep saving with retirement savings plans
    Don’t stop putting money away just because you’ll retire soon. Make sure you have the right type of Individual Retirement Account for you and try to invest the maximum each year. If you have a 401(k) or 403(b) plan at work, aim to contribute the maximum each year there, too.

  • Use the catch-up rules to save more
    Just as when you were in your 50s, you can still contribute an additional "catch-up" amount to your IRA and your 401(k).

    For IRAs, this means you can contribute $6,500 ($1,000 above the standard limit) in 2015; for 401(k)s, you can put in $24,000, a full $6,000 more than the standard limit in 2015.

  • Tweak your investment mix
    With retirement nearing, you really want to protect yourself against a market downturn. So tilt your portfolio towards security, rather than growth.

    In your 60s, the percentage of stocks or stock mutual funds in your portfolio might be roughly 40%, while the percentage of bonds might be about 60%.* As you get closer to retirement, increase the percentage of bonds in your portfolio.

  • Consider rolling over your 401(k) into an IRA
    You’ll be able to transfer the money in your 401(k) into a tax-deferred Rollover IRA when you stop working. Get materials from your benefits department about how to do it, so you’ll be ready when the time comes.

    Speak with your financial professional to help ensure your portfolio matches your specific financial goals, objectives and tolerance for risk.

    When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees and expenses, services offered, investment options, when penalty free withdrawals are available, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.

  • Talk to your tax advisor about converting a traditional IRA to a Roth
    A traditional IRA requires you to begin withdrawing money by age 70 ½, but a Roth IRA doesn’t have required minimum distributions.

    A Roth IRA might also be worth considering if you plan to leave your IRA money to your heirs. They’ll likely have many years for the Roth IRA earnings to compound tax-free before they need to start making withdrawals.

  • Think about your legacy
    Meet with an estate lawyer to discuss trusts, beneficiary designations, and lifetime giving programs. All of these estate-planning techniques may help you pass a significantly larger amount of money to your loved ones.

Catey Hill is money editor for the New York Daily News online and author of SHOO, Jimmy Choo!; The Modern Girls’ Guide to Spending Less and Saving More.

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