10 Things To Do Within 10 Years Of Retirement

By Jeff Gilbert

Your dreams of white sandy beaches, days spent on the golf course, or more time with family are just around the corner. After countless years of working and saving, you are finally getting closer to the retirement finish line. That doesn’t mean it’s time to put your feet up and count down the days until you pack up your office for good. Determine to finish the race stronger than you started by doing these 10 things within 10 years of retirement.

1. Run Your Numbers Through Different Scenarios

There are countless uncertainties when it comes to your retirement savings. While it may be impossible to predict exactly how long your nest egg will last, you can run your figures through different scenarios to evaluate what will happen if the market crashes, if you face unexpected healthcare costs, or if a spouse dies prematurely. Once you stress-test your savings in this way, you can come up with a plan to mitigate these risks. If you wait until you are retired to take this step, it may be too late to make the changes necessary to maximize your retirement income.

2. Test Out Your Retirement Income

Whether you choose to continue working during retirement or not, you’ll likely rely on a retirement income generated from several different sources, including Social Security, employer-sponsored retirement plans, personal retirement plans, and other savings and investment programs. Over the course of your working years, you’ve likely been contributing money to these accounts so you’ll have a consistent income in retirement. But how do you know if it’s enough money?

One way is to test it out. While it’s generally recommended to assume you’ll need 80% of your current income in retirement, you and your family may need more or less. For a few months, test drive a reduced budget. To start, try living on 80% of what you currently receive. Do you find yourself pinching pennies or did you find even more ways to cut back?

3. Up Your Savings Rate

The closer you get to retirement, the more you should aim to save. Cut back on expenses, channel any raises and bonuses directly to savings, and automate savings increases of 1% every few months.

Your increased savings can be invested into your company 401(k) or 403(b) plan or your personal IRA. If you are over 50, you can invest an extra $1,000 a year into an IRA for a total of $7,000 for 2019. At $6,000, the catch-up contribution for those over 50 is even greater for 401(k) and 403(b) plans, allowing a total annual contribution limit of $25,000.

4. Decide Where You Will Live

According to studies by the Employee Benefit Research Institute, housing expenses account for an overwhelming 43% of spending for those ages 75 and older—even more than healthcare. (1) As you approach retirement, think through where you’re going to live and how much you’ll spend on housing costs in retirement.

If you plan on relocating, do your research. Visit your potential locations, and decide if the climate, community, and area are right for you. If your plan includes staying where you are, ask yourself if downsizing is a viable option. If you want to stay in your current home, look at any modifications that are needed to accommodate aging. Plan to make any expensive adjustments and repairs now before you’re living on a tighter budget.

5. Keep An Eye On Your Investments

The 10-year pre-retirement mark is a particularly appropriate time to adjust your portfolio’s allocations. Meet with your financial advisor to review your current lineup and determine whether your risk tolerance should change.

Along with reallocating your investments, you’ll want to consider how the sequence of returns could impact your portfolio’s value over time. In the simplest of terms, sequence of returns refers to the risk of receiving lower or negative returns early in a period when you’re making withdrawals from your investments. If your retirement date correlates with the onset of a bear market, your savings can be depleted quickly as you withdraw from your portfolio. With a smaller investment base, you’ll have less wealth remaining to benefit from a future market upswing.

To mitigate the risk of sequence of returns ruining your retirement portfolio, work with your advisor to take the appropriate steps, such as reducing volatility, examining your withdrawal strategy, and finding different market options to protect your money.

6. Maximize Your Social Security Benefits

Social Security benefits can be claimed anytime between ages 62 and 70. However, the timing of when you decide to collect these benefits will impact the amount of payout you receive. At 62, you become eligible to receive Social Security benefits for the first time. But before you start claiming Social Security, it’s important to review your benefits and options for claiming so that you can plan to maximize your lifetime benefit.

If you start claiming benefits at age 62, your benefits are about 26% lower than if you waited for full retirement age, and over 40% less than if you wait until you are 70 to claim. It’s also important to consider how long you’ve worked and your lifetime average monthly earnings, which are used to calculate your benefit. In some cases, working a few extra years can have a big impact on your monthly Social Security benefit.

7. Think Long And Hard About Healthcare

No matter how healthy you are today, you may need more health services as you age. According to the Employee Benefits Research Institute, the average couple at age 65 will require anywhere from $157,000 to $392,000 in healthcare costs. (2) Most people don’t even have that much in their retirement accounts to live on, let alone cover medical costs. Even with Medicare, there could be significant out-of-pocket expenses and many conditions and treatments that are not covered.

When choosing your health insurance for retirement, make sure you understand all Medicare options and supplements and work with an experienced professional to help you evaluate your options.

8. Don’t Forget About Long-Term Care

Along the lines of health, think about your potential need for long-term care insurance. An average 63% of today’s 65-year-olds will require some form of long-term care during their lifetimes. (3) On average nationally, it costs $253 per day or $7,698 per month for a private room in a nursing home. (4) But the older you get, the higher your cost for a long-term care insurance policy will be and the greater the likelihood of your application being denied. Generally, the last age long-term care insurance is affordable is when you are in your mid-60s.

If you decide to plan for long-term care, you have a few options. You can go with a traditional long-term care insurance policy, add a long-term care rider to your life insurance policy, purchase an annuity with a long-term care rider, or start saving for your long-term care on your own through a contingency savings account.

9. Create A Tax Strategy

Tax planning can save you more money than you realize. By projecting your future income and taxes now, you may find opportunities to save. When you are living off a fixed income in retirement, tax strategizing can make a world of difference in the longevity of your nest egg.

For example, a $50,000 withdrawal from a Roth IRA will have a wildly different tax impact than that same distribution from a traditional IRA. Creating a tax plan can help you strategically withdraw from your various retirement accounts and minimize your tax liability.

10. Get Professional Advice

Even if you have been saving and planning on your own up until this point, these final years before retirement are critical for making decisions that have far-reaching consequences. If you want to spend your final working years enjoying life rather than worrying, our team at Balboa Wealth Partners would love to help you create a personalized retirement road map that will address your concerns and guide you to financial independence. Take the first step by reaching out to us at 949-445-1465 or jgilbert@balboawealth.com to schedule a no-obligation conversation.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high net-worth families, Jeff aims to help clients achieve their short-term and long-term goals and to worry less about their finances and more on their passions in life. Based in Orange County, he works with clients throughout Southern California, as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com.

Advisory services provided by Balboa Wealth Partners, Inc, an Investment Adviser registered with the SEC.  Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice.  Neither firm is affiliated.

_________

(1) “How Does Household Expenditure Change With Age for Older Americans?” Employee Benefit Research Institute. September 2014. https://www.ebri.org/pdf/notespdf/EBRI_Notes_09_Sept-14_OldrAms-WBS.pdf

(2) https://www.ebri.org/pdf/notespdf/ebri.notes.oct13.retsvgs1.pdf

(3) https://longtermcare.acl.gov/the-basics/

(4) https://longtermcare.acl.gov/costs-how-to-pay/costs-of-care.html

Why I Love Living And Working In Newport Beach

Newport Beach is a gorgeous coastal city in Orange County, California. And let me tell you, it’s an absolute paradise—a paradise I’m lucky enough to call home. I can honestly say there are few places on this earth where I’d rather live.

If you’re looking for a place to live (or visit) in California, I’d highly recommend adding this delightful city to the top of your list. There are endless reasons to love it here, but if I had to narrow it down to just four, here’s what they’d be.

Year-Round Beautiful Weather

In Newport Beach, we enjoy year-round sunny weather. Summer temperatures average out at a comfortable 80 degrees, while winter temperatures drop slightly and hover around the mid-60s. Not bad at all. What’s more, we typically receive less than 10 inches of rain per year. All in all, it makes for “perfect day” weather pretty much every day (definitely no lack of Vitamin D here). I can’t imagine it getting much better than this. Seriously, what more could you ask for?

A Great Family Community

With highly rated public schools, safe neighborhoods, and superb quality of life, Newport Beach is the perfect place to raise a family. Speaking of public schools, Newport Beach has many impressive options, including Orange County School of the Arts, University High School, and Corona Del Mar High School. These are some of the top-rated schools in not only Orange County, but in all of California. (1)

Ample Opportunities For Community Service

There is little I find more rewarding than giving back to my community. And in Newport Beach, there are many ways to do it. Whether it be volunteering in senior centers, tutoring children, working to protect the environment, or caring for animals, there is always something to do to build relationships and serve the community in meaningful ways.

Endless Entertainment For The Entire Family

I absolutely love the beach. And the vast coastline in and around Newport Beach doesn’t disappoint. That said, there’s much more to this city than just surf, sun, and sand.

Fun opportunities for kids are basically unlimited. A few favorites include the Centennial Farm, Marina Park playground, and Balboa Fun Zone. Adults are also guaranteed to stay entertained with great camping locations, shopping malls, sporting activities, fantastic restaurants, and exciting nightlife.

Whatever your age or interests, you can always find something fun to do. I’d even go as far as to say that it’s hard to get bored here.

Want To Live In Newport Beach?

Whether you’re single, married, or have kids, Newport Beach is a dream destination to lay down roots. However, as you can imagine, living in such a perfect location isn’t cheap. That said, if Newport Beach sounds like your ideal home, don’t lose hope yet. With smart financial planning, you may be surprised at what you can afford (or how quickly you can save).

At Balboa Wealth Partners, we can put together a personalized financial plan that will help you reach your goals. If you’re interested in hearing how we can help, give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high net-worth families, Jeff aims to help clients achieve their short-term and long-term goals and to worry less about their finances and more on their passions in life. Based in Orange County, he works with clients throughout Southern California, as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com.

Advisory services provided by Balboa Wealth Partners, Inc, an Investment Adviser registered with the SEC.  Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC. Balboa offers advisory services independent of Chalice.  Neither firm is affiliated.

_________

(1) https://www.niche.com/places-to-live/newport-beach-orange-ca/