Nearing Retirement? Five Financial Resolutions for You in the New Year

As we say goodbye to 2012 and prepare for the New Year, resolutions come to mind. While everyone can benefit from a year-end financial health check-up, if you’re in the final stages of your career, now is a good time to make sure you have your affairs in order. Consider adding these resolutions to your list to help ensure a smooth transition from the workplace to retirement.

Review your monthly expenses and budget.

It is useful to know exactly what you spend each month and create a budget that makes sense for your long-term needs. While employed and earning a salary, it’s often easy to make up an overage in spending that happens today the next time you receive a paycheck. You won’t have this same luxury once you retire.

Examine what it costs to cover the essentials and determine how much you spend on discretionary items. Look carefully at the expenses that tend to fluctuate each year including entertainment, healthcare, recreation, travel and healthcare. When it comes to your financial picture, this added knowledge will help you plan accordingly.

Replace your paycheck.

Upon retirement, one of the best moves you can make is to replace the paycheck you used to receive on a regular schedule so you have a predictable amount of income every month. To do so, you will want to carefully examine your retirement account balances, your lifestyle needs and wants and any additional major financial changes on your horizon (proceeds from the sale of a home, for example).

The process might seem complicated, especially if you want to structure your withdrawals in the most strategic and efficient way. A financial advisor and tax professional are two great resources to turn to for help and advice. With expert input, you can create a plan for your retirement years and rely on this roadmap to help alleviate stress that might come with managing a fixed income.  

Review your portfolio.

If you’re nervous about your retirement accounts and invested assets, meet with a financial advisor and review your portfolio. Perhaps your investments fluctuated during the recession. Maybe it’s time to reallocate assets to a stable set of funds that won’t waver widely with the market. Either way, knowing exactly where you stand will help you sleep peacefully each night.

A financial advisor can help evaluate how your assets are allocated and make investment suggestions that can help offer a level of growth, income or preservation that’s right for you. Taking this balanced approach is vitally important as you enter your retirement years.

Remain calm and rational.

If it’s your habit to watch the 24/7 financial news networks, do yourself a favor and find a new hobby as you enter retirement. A steady stream of economic news puts many people on “red alert” status. The constant swings of the market can even cloud good judgment and prompt you to make sudden changes to your investment strategy. It’s just not healthy.

When you retire, try to adopt and maintain a “steady as she goes” philosophy. Making risky investments, buying or selling property or withdrawing all of your money from liquid investments may seem like a good idea today, but might cost you financial security in the long run. Instead, focus on stabilizing your financial situation. Consider developing a retirement network of friends and family members with whom you can talk candidly about financial decisions. This network will help you through anxieties and keep you on solid footing when it comes to financial decision making.

Prepare for the unexpected.

If you don’t already have a will, resolve to get one in the New Year. If you have one in place, make sure it reflects your current wishes and double check your beneficiary designations. Also, set aside time to discuss your plans with your spouse or significant other as well as your children – and tell those closest to you where they can find your important documents. These can be difficult conversations for everyone involved, but they will help reduce the amount of stress you and your family may face in the future.

Developing a good relationship with a financial advisor – and staying in touch with him or her during these crucial years – should also be part of your retirement plan. A financial advisor will not only help you manage a budget for retirement, but will help keep you on the right path to ensure your years of retirement meet your expectations.

Jose Vicente, Jr. CFP®, CLTC is a Financial Advisor and CERTIFIED FINANCIAL PLANNER practitioner ™ with Ameriprise Financial Services, Inc. in Saddle Brook, NJ.  He specializes in fee-based financial planning and asset management strategies and has been in practice for 7 years. To contact him: http://www.ameripriseadvisors.com/jose.x.vicente  201-221-2700 ext. 2705. Ameriprise Financial Services, Inc. 250 Pehle Ave. Suite 500 Saddle Brook, NJ 07663. Advisor is licensed/registered to do business with U.S. residents only in the states of NJ, GA, NY, FL, SC, VA, PA, CT, DC. Ameriprise Financial and its representatives do not provide tax or legal advice. Consult your tax advisor or attorney regarding specific tax issues. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients. © 2012 Ameriprise Financial, Inc. All rights reserved. File #149141