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Do you dream of retiring before you turn 60? How about before you turn 50? If so, you might want to think twice before you make the move. If your heart is set on leaving work early, be sure you leave with the right mindset and the right estimation of your financial potential.

Retire with a realistic picture of your income needs.

In late 2006, the Center for Retirement Research at Boston College surveyed 400 private sector employers. Those employers estimated that 25% of their employees between 50 and 60 years old lacked the financial resources to retire even at the traditional retirement age. If you’re like most Americans, your retirement expenses will be roughly 75–80% of your pre-retirement expenses. So, you need to determine if the income derived from your 401(k), 403(b), pension, or other sources can generate that. Remember, you can’t receive any Social Security benefits before age 62.

Retire with the idea that you’ll live to be 100.

With recent advances in health care, you might become a centenarian. That means your income streams may need to last 20, 30, 40, or even 50 years. Any income streams that you have today may need to be supplemented or adjusted due to unforeseen needs and inflation. Many new retirees make the mistake
of withdrawing income at too high a rate in the first few years after leaving work. They live “high on the hog” for a while, only to discover, to their chagrin, that their retirement nest egg is shrinking because they are spending more than their portfolios can earn back. Additionally, you may also have to pay for health insurance if you retire before age 65. All of this may point you in the direction of part-time employment rather than total retirement.

Retire with purpose.

Leaving work behind can be exhilarating. But after the first few months of fun, you may also face the question, “Now what?” Early retirement is better with a plan for purposeful and meaningful living regardless of your finances.

If you do a Google or Yahoo! search with the right keywords, you’ll come across a number of articles about people who chose to retire late. They kept working out of passion or necessity. If that’s not for you, and you don’t want to work much longer, talk to me, and we’ll take a look and see if you are financially prepared to retire. I’ll share my professional insight and discuss your options.

How do you picture your future?

If you are like many people who are contemplating retirement, your view is likely more pragmatic compared to your parents. This doesn’t mean you must have a “plain vanilla” tomorrow. Even if your retirement savings are not as great as you would prefer, you still have lots of potential to design the life you want.

With that in mind, here are some key things to think about.

What do you absolutely need to accomplish?

If you could only get four or five things done in retirement, what would they be? Answering this question might lead you to compile a short list of life goals. While they may have nothing to do with money, the financial decisions you make may be integral to achieving them.

What would revitalize you?

Some people retire with no particular goals at all. Others are simply burnt out. After weeks or months of respite, ambition inevitably returns. They start to think about what pursuits or adventures they could embark on to make these years special. Others have known for decades what dreams they will pursue, and yet, when the time to do so arrives, those dreams may unfold differently than anticipated and may even be supplanted by new ones.

In retirement, time is your most valuable asset. With more free time and opportunities for reflection, you might find your old dreams giving way to new ones. You may find yourself called to volunteer as never before or motivated to work again in a new context.

Who should you share your time with?

Here is another profound choice you get to make in retirement. The quick answer to this question for many retirees would be “family.” Today, we have nuclear families, blended families, extended families; some people think of their friends or their employees as family. You may define it as you wish and allocate more or less of your time to your family as you wish (some people do want less family time when they retire).

Regardless of how you define “family” or whether or not you want more “family time” in retirement, you probably don’t want to spend your time around “dream stealers.” If you have a grand dream in mind for retirement, you may meet people who try to thwart it and urge you not to pursue it. (Hopefully, these people are not in close proximity to you.) Reducing their psychological impact on your retirement will increase your happiness.

How much will you spend?

We can’t control all retirement expenses, but we can control some of them. The thought of downsizing may have crossed your mind. You can also lose one or more cars (and the insurance that goes with them) and live in a neighborhood with extensive, efficient public transit. Ditching landlines and premium cable TV (or maybe all cable TV) can bring more savings. Garage sales or making donations can have financial benefits while also helping you reduce clutter, either generating cash or a federal tax deduction.

This article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your overall tax strategy.

How are you preparing for retirement?

This is the most important question of all. If you feel you need to prepare more for the future or reexamine your existing strategy in light of recent changes in your life, conferring with a financial professional experienced in retirement approaches is a smart move.

August is National “Make a Will” Month, and it’s a great annual reminder to update your will if needed and create a will if you don’t have one already. A will is an important estate-planning document that can help you transfer your assets with ease. Having a proper will can make the difference between a smooth transfer of assets and a probate nightmare.

Let’s learn more about what wills are, why you need one, and some tips on how to create or update your will during National “Make a Will” Month.

What Is a Will?

A will, or a Last Will and Testament, is a legal document that outlines your intention for the distribution of your assets after your death. It is an integral part of a comprehensive estate plan and helps your loved ones avoid legal and financial loopholes and know what to do with your assets. These explicit instructions are essential and can help everyone avoid a lot of headaches.

Wills vs Trusts

When you’re researching estate planning documents, you have likely come across both wills and trusts. While both documents can help dictate what you want to do with your assets when you’re gone, there is one main difference.

The primary difference between a will and a trust is that a trust takes effect as soon as it’s created and signed, while a will does so only after you pass away.1 There are also two different types of trusts to consider: irrevocable and revocable.

• Irrevocable trusts are trusts that can’t be changed or canceled after they have been signed.
• Revocable trusts can be changed, and the grantor has the right to change the terms or even end the trust.

Some other differences between wills and trusts are that a will requires probate to transfer items to beneficiaries, but trusts can avoid probate. In addition, wills are public record and trusts can remain private. Because a trust takes effect right when it’s created, it can be used if you become incapacitated and unable to make decisions independently.

Do You Need a Will?

We face so many financial obligations every day, so should creating a will be at the top of your list? Most financial experts say yes, you need a will. Even if you don’t have substantial assets to transfer, a will can still help your family feel more confident about your wishes. In addition to making the transfer of assets
easier, here are a few benefits of having a will2:

• It allows you to distribute your property and protect your loved ones after you pass away.
• It can provide peace of mind to you and your family.
• You can plan for those in your care (e.g. naming a legal guardian for your children or pets).
• It may prevent family conflict.
• It can eliminate confusion over assets.
• It can ensure that your assets go to the people you want to have them.
• It can help you build a lasting legacy.
• You can use your will to benefit charity.

These are just a few of the many benefits of having a will. To celebrate National “Make a Will” Month, let’s look at how to create a will.

How to Create a Will

Creating a will can be a straightforward process, or it can involve the help of attorneys and financial advisors. Also, the process will depend on where you live because every state has different requirements for creating a will.

Generally, the first step in creating a will is to determine what you want to include. You should include instructions for passing along your assets after your death, including ownership and other instructions. You may consider working with an attorney to ensure that your will contains everything it needs.

Next, you will likely sign your will in front of two witnesses, and these two witnesses will also sign your will. Some states require a self-proving affidavit that you sign in front of a notary, other states require your will to be notarized, and some states don’t require any special self-proving documentation as long as
you sign and witness your will correctly.3

Whether you have $10 worth of assets or $10 million, creating a will is a good idea to give your family more guidance after you pass. Wills help make the transfer of assets easier and give you and your family more peace of mind. Consider creating or updating your will this August for National “Make a Will” Month!