FAQs

Retirement planning can be valuable at any age, but the earlier you begin, the more time you have to save, invest, manage taxes, and adjust your strategy. Planning often becomes especially important in the years leading up to retirement, when decisions about savings, Social Security, pensions, investments, health care, and retirement income begin to interact.

A retirement projection can compare your current savings, expected contributions, anticipated income sources, investment assumptions, and estimated retirement expenses. It can also model different scenarios, such as retiring earlier or later, spending more or less, or experiencing different investment returns. Because circumstances change, retirement readiness should be reviewed periodically rather than treated as a one time calculation.

Before retiring, consider your expected living expenses, health care costs, Social Security strategy, pension options, investment allocation, cash reserves, debt, taxes, insurance, estate plan, and how you will create income from your savings. It is also important to consider large future expenses and how your plan might respond to market declines or unexpected changes.

Retirement income planning involves deciding how and when to draw from different accounts while balancing spending needs, taxes, investment risk, and the need for assets to potentially last throughout retirement. A withdrawal strategy may coordinate taxable accounts, tax deferred retirement accounts, Roth accounts, Social Security, pensions, and other income sources.

Paying off a mortgage before retirement can reduce monthly expenses, but it is not automatically the best choice for everyone. The decision may depend on your mortgage rate, available cash, investment assets, taxes, liquidity needs, other debt, and personal comfort with carrying a mortgage in retirement. The decision should be evaluated within the context of your overall financial plan.

The appropriate time to claim Social Security depends on factors such as your age, health, life expectancy, employment status, other retirement income, marital status, and overall financial plan. Claiming earlier generally provides income sooner but can result in a lower monthly benefit than waiting. A Social Security strategy should be evaluated alongside your broader retirement income plan.

Working while receiving Social Security may affect benefits depending on your age and earnings. It can also affect your overall tax situation. Because Social Security rules and thresholds can change, retirees who plan to continue working should review the current rules and consider how employment income fits into their retirement strategy.

Social Security is one potential source of retirement income and should be considered alongside pensions, investment accounts, retirement plans, cash savings, and other income. Coordinating these resources can help determine when to claim benefits and how much income may need to come from investments.

As retirement approaches, investment decisions often shift from focusing primarily on accumulation to balancing growth, income, liquidity, and risk management. The appropriate asset allocation depends on your financial situation, time horizon, income needs, risk tolerance, and other available resources. Becoming more conservative solely because of age may not address all of these factors.

Asset allocation is the way an investment portfolio is divided among different types of investments, such as stocks, bonds, and cash. The mix can influence both potential return and risk. An appropriate allocation should reflect your goals, time horizon, income needs, liquidity needs, and ability and willingness to tolerate market fluctuations.

Market declines can be uncomfortable, but making major investment decisions based primarily on fear can interfere with a long term strategy. Before making changes, consider whether your goals, time horizon, income needs, or financial circumstances have actually changed. A diversified investment strategy is generally designed with the expectation that markets will experience periods of volatility.