This was originally published on Monday, November 5, 2018, in the Pacific Daily News. Click here to subscribe to the PDN.
You have planned for many years and it is finally here. Retirement is a time for tremendous change and it is important to prepare your thoughts and expectations of the retirement life you desire. Do you want to travel, spend time with family who are off island, or maybe take on a new hobby? To achieve your retirement dreams, you should have a clear financial plan.
Consolidate. Throughout your career, you may have accrued numerous retirement accounts. By consolidating your accounts, you could reduce the fees that you pay. It also gives you a comprehensive picture of your true retirement finances.
Withdrawals. Take the time to understand when it is beneficial to start withdrawing from your retirement accounts. You do not want to withdraw too much or too early. Create a plan that has the dates that reduce your fees and maximizes your savings. The same goes for your Social Security benefits. If you can hold off until 70 years of age, you should consider it.
Income. If you would like to supplement your retirement income, consider working part time. Retirement is a great way to turn a hobby or passion into a part-time job. Money that you bring in will reduce your withdraws. If possible, live off the income of your accounts and leave the principal amount to continue to earn interest. Do not overspend. It is tempting to travel and enjoy retirement. Spread out your large spending events to let your savings build back up.
Downsize. Now that the kids are living on their own you may not need the large house. Moving into an apartment or condo can be a smart choice. It could reduce your utility bills and the sale of your home may also add to your retirement income. Think about the benefits of living in a condo or an apartment such as lawn care, maintenance, and accommodations. Accommodations can include a pool, gym, laundry and recreational areas. You may also want to consider moving to an area where the cost of living is much lower, and healthcare is more affordable. If you and your spouse are both retired, perhaps you do not need two vehicles.
Portfolio. Ensure that your portfolio is not too aggressive or too conservative. Retirement is not the optimum time to be aggressive with your portfolio. On the other hand, being too conservative is not a good idea either. Being too conservative may keep your portfolio from growing enough to cover your needs. You also want to diversify your portfolio smartly to keep from loosing money when an investment does not perform as well.
Estate. Keep your will, trust, living will and power of attorney up to date. Decide who will inherit your assets. Identify the people who will carry out your wishes. Not having a will is costly to your heirs and your assets could be used in ways you didn’t intend.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.