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  • Mark Fonville, CFP®

5 Retirement Questions to Ask Yourself Before You Retire

Retirement questions to ask

Retirement is near.

So, you’re probably thinking, what are the top retirement questions to ask yourself before you take the plunge?

After all, there is a lot at stake.

Nearing retirement is exciting and rewarding. What kind of life do you want? What do you imagine yourself doing?

Perhaps the idea of traveling, new hobbies, and volunteering, gets you excited. Or maybe the idea of making your own schedule and having better control over your time is a motivating factor.

The future is yours.

But, retirement is also one of the most critical phases of your life. Small mistakes can snowball into big problems.

That’s why it’s imperative to identify opportunities and red flags in advance of taking the next step. Depending upon your retirement age, you have one chance to make your money last twenty five years or more.

After helping hundreds of individuals across Virginia and the United States transition to and through retirement, we’ve learned a thing or two about financial planning for retirement.

Our experience has taught us a lot about what works and...what doesn’t work.

Part of the lessons we've learned include key retirement questions to ask before you take the plunge. So much so, we thought you may benefit from hearing a few insights that we've gathered over the years.

Here are five retirement questions to ask yourself before you sail away into your golden years.

1. Do I have a spending and retirement income strategy that works?

Probably the most glaring aspect of your retirement transition is figuring out how much you can spend each year to support your lifestyle and financial goals.

Those approaching retirement can get a sense of their retirement spending by looking at their current household budget. Tracking your spending now can be a solid benchmark for future expenses. While some line items will change, many people find that their spending remains rather consistent in retirement.

Once you have a better idea of how much you’ll be spending, compare that plan against the sources of income you’ll have to support it, like Social Security, part-time work, pensions, and withdrawals from your retirement accounts.

Withdrawing from your retirement savings is the exact opposite of what you’ve been doing up to this point.

Retirement represents a complete shift in the way you treat your savings, and an important element of this shift is deciding how to withdraw. Many retirees consider how much they should, can, or need to withdraw but the specific method is often overlooked.

Building an efficient withdrawal strategy can bring immense value to your retirement income plan. If you have different accounts like a 401k, Roth IRA, and a taxable brokerage account, consider how much should come from each (including RMDs once appropriate).

It can be prudent to take a portion of your annual withdrawal from each account rather than deplete one account at a time. But, the amount you withdrawal from your accounts depends upon your tax situation.

Also, when you decide to start social security benefits can influence when and which retirement accounts you withdraw from first. Do you plan to take social security income at 62, full retirement age, or wait until age 70? The decision matters.

Withdrawal planning is important for several reasons. With the right plan, you can reduce unnecessary taxes, take advantage of compounding investments, and prolong the longevity of your accounts.