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Money Matters
Retirement

Five Crucial Steps to Take Before Retirement

Randy and Todd Martin are a father and son team who, after working together for more than  18 years,  decided to write  a brief, easy to understand book, Realistic Retirement for Realistic People, explaining a process to follow for those contemplating  retirement.

“Retirees need to consider how social security, investments , taxes, pensions, health care and legacy planning will dovetail together to accomplish their retirement objectives,” the authors say.  “They need to ask the right questions to get what they want in retirement with what they have worked so hard to accumulate over their working lives.  ”

Here are five crucial steps Randy and Todd believe all retirees need to take in order to avoid mental and financial freefall during retirement:

1.  Determine What Makes Retirement Worthwhile – Certain events have brought you joy and probably involved special interests shared with friends or family.  Take the time to reflect on how you may replicate those good times during retirement.  The happiest retirees will tell you it’s not all about money! Identify the things you do that bring you your best pleasure in life.

2.  Calculate What You Can Get with What You Have – Your pension plan, Social Security and individual investments must provide the income you need to live the life you desire during retirement.  You must coordinate these assets to last for thirty or forty years in an inflationary environment.  Just a few questions you need to answer are:  How can you get the most out of your Social Security?  Which assets should you spend first and last?  How can you coordinate income to reduce taxes?  What return do you need to avoid running out of money?  What will change when your health changes?  These and other questions should all be answered so you can make the best informed decisions with your life.

3. Create a Human Nature Firewall – Greed and fear are formidable foes to your successful retirement.  Economic conditions will vary during retirement.  Fear will strike when times are bad, jubilation when times are good.  Human nature demands that you exchange poorly performing investments for those reaching new highs. But ice water in your veins, or a good  investment strategy, is required to avoid buying high and selling low. You need a firewall between your human nature and your investments.  Adequate non-volatile assets should exist to provide for the first 10-20 years of retirement.   More volatile assets may then be staged to provide income later in the retirement cycle.  If you own an asset no one wants today you may still own it when everyone wants it tomorrow.  That won’t happen if you have to convert the asset no one wants into income you need today!

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