Retiring in the Next 5 Years? How to Protect Your Wealth

Chris Maurer |

The five-year period before retirement is the most critical for making decisions on how to protect your wealth. As retirement planning is no small task, you must consider all your assets, accounts, and investments to make the wisest choices moving forward. At Park Place Financial, we help numerous clients plan for the future with personalized retirement income strategies. Here, we discuss how to secure your wealth if you plan on retiring soon. 

Understanding How Much You'll Need to Save 

Those who plan to retire soon must think about how much money they need to save up overall. This amount depends on several factors, including your tax rate, investment returns, and life expectancy. It also depends on your lifestyle and goals as a retiree — do you plan on taking up new hobbies or going on any trips? 

Your retirement income sources dictate how much investment you'll need to fund your lifestyle after you stop working. While your pension, social security payments, and wages from possible part-time work will make up the bulk of your retirement income, investments and savings accounts can also make up a significant portion of your retirement funds.

Exploring Your Options

While there are numerous steps you can take to protect your wealth, partnering with a financial advisor is a good place to start. They can offer personalized retirement income strategies you may not have considered on your own. A retirement planner will work with you to form a cash flow projection that displays how you use your resources over time. Some of the things to consider before mapping out your retirement plan with a professional include:

Maximizing Social Security Benefits 

Social security plays a crucial role in retirement income for over 64 million people in the United States. Many retirees recognize that they lose benefits if they acquire them too early, but few know that delaying social security can increase their benefits later. If you wait to collect social security once you reach the eligible age, your benefits will increase by 8% every year. This provides you with more wealth for spending and investing. The years in which Social Security is delayed can create more opportunity for tax planning strategies such as Roth conversions. Making it a priority to assess your social security claiming strategy when you turn 62 can help maximize your available funds. 

Investing Responsibly 

A diversified portfolio can help you achieve the proper balance. As you get closer to retirement, you may need to shift your investment strategy. Typically, those nearing retirement age will decrease their allocation to equities and increase their allocation to bonds to reduce portfolio risk. However, if you do not invest enough in stocks you may not obtain the valuable returns you need to grow financially. Additionally, it's important to consider how inflation can alter the amount you budget each year for spending needs. 

Planning Your Estate 

Planning for your estate is a necessary component of retirement, even if you expect to live many years after your career ends. Estate planning fulfills two central purposes: entrusting your decisions to others when you can no longer make them for yourself and establishing a financial legacy. This process includes creating living and last wills, trusts, determining the number of beneficiaries you have, setting up the proper power of attorney documents, and other tasks.

Preparing for Taxable Events 

Taxable events, such as the sale of your company or an increase in your stocks, can significantly impact your wealth in retirement. To secure your funds, consider contributing the maximum amount you can to your 401(k) and other tax-deferred plans by the date of your retirement. Speeding up these deferrals can decrease your income right before a taxable situation and enhance your retirement savings. Additionally, small business owners with these plans can use their business revenue to optimize benefit contributions and profit-sharing the year they sell. 

A financial adviser can help you determine how much you need to save, establish a withdrawal strategy, and review the implications of various health insurance options. Depending on how much money you've accrued, an advisor may also pinpoint specific areas where you can mitigate retirement expenses and make the most of your hard-earned savings going forward.

Speak with a Park Place Financial Retirement Planner 

Before transitioning to this next phase in your life, turn to Park Place Financial for exceptional retirement planning guidance. We work with each client to develop personalized plans based on their evolving financial needs and goals. Our unique team of financial planners delivers the utmost transparency in all our services. 

Our experience and expertise allow us to guide each client through short-term and long-term financial targets. Reach out to us today to learn what retirement income strategies we can offer you as you plan for the future.