As your retirement approaches, you’re bound to have concerns about the changes ahead. Why not put your mind at ease by taking steps to take charge of your new financial reality? In addition to working with a financial advisor to manage your financial affairs, be proactive with the tasks that are within your control to help make a smooth transition to retirement. Here are three activities to complete over the course of the year leading up to your last day in the workforce:

• Get a handle on your expenses. Your retirement spending habits will go a long way toward determining whether you have enough to be comfortable for years to come, and your lifestyle after you leave the workforce should be in line with your retirement income. Pull out your calculator and carefully list your projected expenses. Identify predictable, recurring costs for housing, utilities, food and other necessities. Factor in fun money and plan for the unexpected as well. Consider “practicing” retirement by following your projected retirement budget for several months and make adjustments as needed.

• Make a date with Social Security. If you want your Social Security benefits to kick in right away, plan accordingly. The Social Security Administration suggests that you apply for your benefits three months before you wish to begin receiving them. This includes your Medicare benefits, which will influence your health care costs. Do some research and meet with your financial professional to understand how your retirement age will affect the benefits you will receive so that you may make an informed decision. Remember that, in most circumstances, it makes sense to wait until age 70 to draw benefits.

• Rebalance your investments. Evaluate your asset allocation and rebalance your portfolio if you wish to reduce risk and preserve capital. Depending upon your goals and your comfort with potential volatility, you may want to divest of high-risk stocks and divert assets to more secure, slow-growing investment vehicles. Liquidity can be more important in retirement, so consider moving your money into more liquid savings.

Once you cross the retirement threshold, here are three things you can do in the first three months to get off to a good start.

• Start on track to stay on track. Begin your retirement with the smart habit of carefully monitoring your spending and income. Thanks to electronic banking, investing and bill paying, it’s easier than ever to keep tabs on your dollars.

• Update your will and insurances. Now that your life circumstances have changed, revisit your will and insurance policies. Are your beneficiaries current across these contracts? Is your will complete? You may find that the type and amounts of insurance you’ve had are different from what you now need.

• Enjoy the retirement you’ve earned. Now that you have more free time, follow through on your plans to reconnect with old friends, try a new hobby, join a club, volunteer, travel or do whatever it is you enjoy.

 

Forrest A. Johnson III is a financial advisor with Ameriprise Financial Services Inc. in Natchez. He can be reached at 601-442-6292 or 319 Main St.