Are You Ready to Get Your Financial House in Order?

Written By: Katana Abbott

My husband is eligible for his pension now and want to compare taking it at age 60 to age 65.

He is also looking at taking Social Security early at 62 instead of 70. I think he will find it eye-opening at the least.

There is magic in knowing these numbers. With this knowledge, you can make smart choices.

I highly recommend that you find a person you can trust and someone willing to do a financial plan, so you can see where you stand, and to help you identify and explore your vision, values, and goals. Finding the right person is a big job.

Having a trusted adviser is one of the very best gifts you can give to yourself.  You will want assistance with not only the big picture, what I call your Vision or Dream, but to help you though the Discovery Process which is where I spend 80% of my time.  This is where you get clear about not only your goals (which is what you want) but your values (which is WHY your goals are even important ant to you).

The Six Areas of Financial Planning include:

Financial Position:

  • Create a cash flow statement which breaks down income and expenses.
  • Determine your net worth by listing assets and liabilities.

Income Taxes:

  • Identify when to take Social Security to OPTIMIZE your benefits. Learn how to make your Social Security Tax Free.
  • Discuss how to create tax-free income by considering things like Roth IRAs, Tax Free Bonds, and Tax Credits.

Investments:

  • Protect and grow your nest egg.
  • Analyze investments for quality, safety, income needs, tax situation, etc.
  • Identify whether investments are manageable or all over the place.
  • See if you properly diversified between all asset classes, including the right type of bonds based on market cycles and interest rates.

Retirement:

  • To see how much you will need vs. have.
  • Establish a plan to create lifetime guaranteed income with your safe money.
  • Discover when to take your pension and qualified plan distributions.
  • Project retirement income needs by looking at inflation, investment earnings, and of course, market risk. Review this annually.

Estate:

  • Review and analyze current estate planning needs: Wills, Trusts, Powers of Attorney for Health and Financial in case you are unable to make decisions for yourself.
  • Verify beneficiaries on life insurance, annuities, and retirement plans,
  • Decide what you need and desire for financial independence. How much will you leave for a family legacy? How will you allocate your social legacy regarding gift and tax?

Protection:

  • Project how an unexpected premature death, disability or even long-term care expenses, for you or your loved ones, could affect your savings and lifestyle.
  • Discover how proper insurance planning can transfer this risk.

A great financial planner will ask you to create a detailed budget, asking when certain expenses end, decrease or increase — like college expenses, health insurance and medical out-of-pocket costs, home improvements and maintenance, and even downsizing.  They will use these numbers throughout your analysis, and will calculate how taking your Social Security and pensions at different times can affect your nest egg. You will also discover how much you need to be saving TODAY to meet your goals and then track your progress along the way!

When you look at your retirement plan, do any of these apply to you?

  • You plan to work forever, either because you need to or want to.
  • You left or lost your job, dipped into your 401K, and may have even paid taxes and penalties on it.
  • You aren’t saving anymore or don’t even have a retirement plan.
  • You have never seen your Social Security estimate.
  • You don’t understand your pension and benefit statements or even know what or where they are.
  • You’re paying so much for your children’s college that there is nothing left for you to save for retirement.
  • Your kids have moved back home after college — enough said.
  • You have run up credit card debt and/or college loans and are trying to pay them off first.
  • You lost a big chunk of your savings in the 2008 market crash, never jumped back in, and are afraid it’s too late.
  • You are hearing that the stock market crash, never jumped back in, and are afraid it’s too late.
  • You are putting all your money into real estate.
  • Your best investment is your business, so you have everything tied up in that and just pray you don’t get disabled.
  • You have no idea where to start or how much you will need anyway.

If you answer yes to any or all of these, then you are not alone.  According to a recent GoBankingRates survey, one-third of Americans report having absolutely NOTHING saved for retirement. As if that isn’t scary enough, 56% have saved $10,000 or less. Women have an even higher rate of not saving for retirement. A whopping 63% if women say they have no savings or less than $10,000 in retirement savings.

I believe that work is the New Retirement Solution and so do more and more Baby Boomers who are exploring their options. In a Gallop Poll, 80% of Baby Boomers approaching retirement  expect to continue working after ‘retiring’ to supplement their pensions, Social Security, and savings.

This certainly is a different retirement than our parents – things have changed dramatically over the last two decades. Most of the clients I work with are interested in working in retirement not only for financial reasons, but to continue doing something meaningful  where they are utilizing their unique abilities, life experiences, and making a difference in the world.

It’s never too early to plan, whereas waiting too long can sabotage opportunities and make your planning much more difficult with less choices. I always say that retirement is when working is OPTIONAL and retirement is affordable. Doing a financial plan will help you see these numbers!

If you are ready to explore your Retirement Reinvention, feel free to schedule a complimentary 30-minute retirement Discovery Coaching Session with me now at www.talkwithkatana.com 

Katana Abbott

Katana Abbott, CFP®, is a Midlife Millionaire® Coach, founder of the Smart Women Companies, and the host Smart Women Talk Radio with over a million subscribers.  For over 30 years, Katana has shown women how to take charge of their life and finances and believes it’s never too early to plan for expected and unexpected events like retirement, encore careers, moving abroad, or preparing for long-term care.  She has written several books, created a financial literacy course, and is a popular speaker. Katana has been honored by NAWBO as one of Detroit’s Top 10 Business Women, receiving the Breakthrough Award. To download her new retirement guide, Three Smart Strategies for a Midlife Millionaire® Lifestyle. visit www.katanaabbott.com

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