Thanks for joining us today. We’re looking at a great topic: preparing for retirement. The only thing better than preparing for retirement is living in retirement.

We’ll start with our agenda and where we’re headed today. First, we’ll discuss where to start. Then we’ll look at assessing your financial situation, creating a budget, understanding Social Security, healthcare needs, investments, income planning, and finally, reviewing your estate plan.

As we begin, one thing I’d like to mention is that if you’re hoping to come away from this webinar with every retirement question answered, I may miss the mark a little. Retirement planning is highly individualized. Rather than solving every question today, we’ll introduce many of the topics you should be thinking about and begin working through as retirement approaches. Think of this as a starting point that helps identify the questions you need to ask and the factors you need to consider. Those questions often lead to deeper conversations, and that’s what we’re here to help with.

Where to Start

Retirement planning begins with the dream phase. Where do you want to live? When do you want to retire? What do you want to do with your time? These are the exciting questions that come with the flexibility and freedom of no longer having to go to work every day.

Maybe you’ve already thought through some of these questions. Perhaps you have answers, or maybe you’ve never considered them before. Either way, as retirement gets closer, you’ll need to think through how your life may change and what choices become available to you. Questions such as how much money you currently have, how much you’ll need, and how those pieces fit together all begin to guide the planning process.

There are also several key retirement milestones to keep in mind. At age 50, you become eligible for catch-up contributions to retirement accounts such as 401(k)s, IRAs, and Roth IRAs. This allows you to increase your retirement savings as you approach retirement.

At age 59½, the IRS early-withdrawal penalty generally goes away, allowing you to access retirement account funds without incurring additional penalties.

Age 62 is the earliest age you can begin collecting Social Security benefits. You can choose to delay taking Social Security beyond that age, which may increase your monthly benefit.

At age 65, you become eligible for Medicare, marking a significant transition in healthcare coverage.

For those born between 1943 and 1954, full retirement age for Social Security is 66. For later birth years, it gradually increases until it reaches age 67.

Finally, age 73 is when required minimum distributions (RMDs) generally begin. This is the point at which the IRS requires you to start withdrawing funds from certain retirement accounts and paying taxes on those distributions. These ages have changed over time and may continue to evolve under future legislation.

These milestone ages are important waypoints as you progress toward retirement.

Assessing Your Financial Situation

Once you’ve identified where you’re headed, the next step is determining where you’re starting from. Any successful journey requires knowing both the destination and your current location.

Begin by evaluating your savings, investment accounts, debts, and other assets. Do you still have a mortgage? Vehicle loans? Investment properties? Business interests? Consider which assets you’ll keep during retirement and which ones may be sold, exchanged, or repurposed.

As you assess your financial situation, it’s also important to think about inflation. Prior to recent years, inflation wasn’t always top of mind. Today, it’s something everyone is talking about, and for good reason. Over time, goods and services become more expensive. The amount of money needed to purchase something today will likely be greater in the future.

Whether it’s groceries, utilities, travel, golf, or other retirement activities, prices are expected to rise over time. One helpful rule of thumb is the Rule of 72. By dividing 72 by an inflation rate, you can estimate how long it may take for prices to double. For example, at 4% inflation, it could take roughly 18 years for costs to double.

Understanding inflation is essential because it directly impacts how much income and savings you’ll need throughout retirement.

Creating a Retirement Budget

I know the word “budget” can feel like a four-letter word, but it remains one of the most important components of retirement planning.

Many people ask, “How much will I need in retirement?” Others are asked that question and honestly don’t know where to begin. Creating a retirement budget helps answer that question.

Start with your fixed expenses. These include housing, property taxes, insurance, utilities, groceries, transportation, and other recurring obligations. Even if your mortgage is paid off, you’ll still have costs associated with homeownership.

Next, consider discretionary spending. How much do you plan to travel? How often will you dine out? What hobbies do you enjoy? Whether it’s golf, boating, hiking, tennis, or other recreational activities, these costs should be included in your planning.

You’ll also want to think about major future purchases. Retirement can last 20 or 30 years, which means you may replace vehicles, remodel your home, purchase a second residence, or make other significant expenditures during retirement. Some individuals may also plan to support charitable organizations or provide financial gifts to children and grandchildren.

A common rule of thumb is that retirees often spend approximately 75% of their pre-retirement income. While this can serve as a starting point, actual spending varies significantly from one household to another.

Understanding Social Security

Social Security is one of the most common sources of retirement income and generates many questions.

Your full retirement age depends on your year of birth. While some individuals have a full retirement age of 66, younger generations will generally have a full retirement age of 67.

You can begin collecting benefits as early as age 62, but doing so results in permanently reduced monthly benefits. Conversely, delaying benefits beyond full retirement age increases the amount you receive each month.

One common question is whether it makes more sense to claim Social Security early or delay benefits. A simple answer is: “Tell me when you’re going to die, and I’ll tell you exactly when you should take Social Security.”

Of course, no one knows that answer. Instead, we often focus on lifestyle goals. Do you want more income earlier in retirement when you’re more active, traveling, and spending more? Or would you prefer larger monthly benefits later in life?

Generally speaking, the break-even point between taking Social Security early and waiting occurs somewhere around the late 70s or age 80. There are advantages and trade-offs to both approaches, making this an individualized planning decision.

It’s also important to remember that Social Security benefits may be subject to taxation, depending on your income level. Additionally, if you begin collecting Social Security before reaching full retirement age and continue working, earnings limits may reduce your benefits.

Healthcare Considerations

Healthcare is often one of the largest expenses in retirement.

Medical costs tend to rise faster than general inflation, making healthcare planning increasingly important. One significant consideration is how you’ll obtain health insurance if you retire before age 65 and become eligible for Medicare.

Some individuals have access to retiree medical coverage through a former employer. Others may need to purchase insurance through healthcare exchanges or obtain coverage through a working spouse.

At age 65, most individuals become eligible for Medicare. Medicare consists of several components:

• Part A: Hospital coverage
• Part B: Medical coverage
• Part C: Medicare Advantage or supplemental coverage
• Part D: Prescription drug coverage

Understanding these options and associated costs is an important element of retirement planning.

Long-term care is another critical consideration. This includes services such as in-home care, assisted living, and nursing facilities. While long-term care insurance options have become more limited and expensive over time, it remains important to consider how these costs could affect your retirement plan.

Investment Management in Retirement

As retirement approaches, your investment strategy often shifts from accumulating assets to generating income.

This doesn’t necessarily mean becoming extremely conservative. One common mistake retirees make is moving all their assets into low-risk investments immediately upon retirement.

Retirement may last 20 to 30 years or more, which means a portion of your assets may not be spent for decades. Those assets still need growth potential to help offset inflation and maintain purchasing power.

The goal is finding an appropriate balance between growth, risk management, and liquidity while ensuring funds are available when needed.

Income Planning

Income planning becomes increasingly important as you transition from earning a paycheck to relying on retirement assets.

Potential income sources include:

• Social Security
• Pension income
• 401(k)s and IRAs
• Roth IRAs
• Rental properties
• Dividend income
• Health Savings Accounts (HSAs)

HSAs deserve special attention because they offer a unique tax advantage. Contributions may be made pre-tax, growth is tax-deferred, and qualified medical withdrawals are tax-free. Very few accounts provide tax benefits at all three stages.

For individuals with pensions, several decisions may arise, including whether to start payments immediately or defer them, select single-life or survivor benefits, or choose between a monthly payment and a lump-sum distribution.

Tax planning also becomes increasingly important in retirement. Different accounts are taxed differently, and withdrawal decisions can impact your tax liability, Social Security taxation, and even Medicare premiums.

Accumulating wealth is generally simpler than distributing it. During your working years, time can often correct mistakes. During retirement, withdrawals combined with market volatility create a more delicate planning environment. That’s why having a thoughtful and flexible income strategy is so important.

Reviewing Your Estate Plan

As retirement approaches, it’s a good time to review your estate plan.

This includes examining wills, trusts, powers of attorney, healthcare directives, and beneficiary designations. Your goals, family circumstances, and financial situation may have changed over time, making updates necessary.

Additionally, laws change. Even if your estate documents were appropriate when they were created, they may need revisions to remain effective.

If it has been more than five years since you’ve reviewed your estate plan, it may be time to revisit those documents and confirm that they still align with your wishes.

Final Thoughts

We’ve covered a lot of information today, and it’s possible I’ve left you with more questions than answers. That’s perfectly normal.

If you’re within several years of retirement, here are a few key takeaways:

• Maximize retirement savings whenever possible.
• Take advantage of an HSA if one is available to you.
• Begin developing a realistic retirement budget.
• Think carefully about how you’ll spend your time in retirement.
• Seek professional guidance rather than trying to navigate every decision on your own.

Transitioning from saving money to spending it can be both exciting and emotionally challenging. Retirement isn’t just a financial transition; it’s also a lifestyle transition. Understanding what will give your life purpose, enjoyment, and fulfillment during retirement is every bit as important as understanding the numbers.

Thank you all for attending. We appreciate the opportunity to work with you and the trust you place in us as we help guide you through these important life transitions. We are honored to be part of your journey and look forward to helping you prepare for a successful and rewarding retirement. Have a great day.