Big Decisions Near Retirement

As you approach retirement, if you’re like many soon-to-be retirees mentioned in various surveys, you have a big question to answer: how will you convert your retirement savings into lifetime income? In other words, you’re transitioning from the “savings phase” to the “payout phase.” Just how do you do that and make sure you don’t outlive your savings?

That’s a pretty tall order, given the great number of unknowns you’ll face in retirement. Like how long will you live? Will you face any catastrophic medical expenses? What’s going to happen to your health insurance premiums while you’re in retirement? How much will you need to spend each year in retirement? How much will you save, if any, while you’re retired?

The good news is that you don’t have to make any permanent decisions all at once on the day you retire. Let’s say you are age 64 and plan to retire this year. Do you have to take all of your money out of your IRAs? No. Do you have to move all of your investments into “safe” things like bonds and CDs, because you are now “retired?” Nope.

All of these decisions can be made over time, which is a wonderful resource that hopefully you now have a lot more of. If so, you have time to do some planning and some research. So put together a “what if” budget for your first year of retirement; use whatever amounts you’ve been spending so far this year to help set your budget. Once you’re actually retired, then track your spending and see if it lines up with your budget.

If not, you may need to adjust your budget. Or you may need to adjust your spending. You’ve been earning and spending money most of your adult life, so odds are you have a pretty good idea of what you’d like to be able to live on in retirement. If all of the income you need to live the lifestyle you want isn’t there yet, time for some more research. Maybe you need to find a part-time job for a little extra income, or perhaps delay your planned retirement date by working full-time a few more years. Maybe you can tweak your investments to generate a little more income.

Just remember to take your time as you enter the “payout phase” of retirement. Don’t let anyone rush you into making permanent decisions. As a retiree, you’re about to have plenty of time on your hands (at least in theory). Take full advantage of that time so you can make good decisions that are best for you, to maximize your retirement readiness!


About Mike Wilson

Michael L. Wilson, MBA, CFP®, CRC®, is the owner of Integrity Financial Planning. Prior to founding Integrity in 1998, he worked for two years as a faculty member at the College for Financial Planning in Denver, training other financial advisors. Mike has 10 years of experience in the mutual fund industry, having worked with Fidelity Investments and Invesco Mutual Funds. He holds an MBA in Finance from Baylor University. Learn more about his work at
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One Response to Big Decisions Near Retirement

  1. Pingback: Retirement Planning: It must be a lifestyle «

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