5 Effective Strategies To Prepare for Retirement

Everyone’s ideal retirement looks a little different. Some folks plan to cut down on spending and live a more frugal lifestyle while others dream of traveling the world. But however you plan to spend your golden years, retirement planning is a must.

Preparing for financial freedom in retirement can seem daunting, especially if you’ve been in the workforce for many years. But the good news is that there are many proven strategies you can use to maximize your investments, passive-income, and tax strategies to enjoy your retirement without sacrificing your lifestyle.

Our advisors are here to break down 5 highly effective strategies you can implement for a prosperous retirement.

1. Take Advantage of Catch-Up Contributions

The government enforces annual contribution limits on most retirement accounts. But after the age of 50, you often have the opportunity to take advantage of catch-up contributions each year.

For example, if you have a traditional or Roth IRA, the standard contribution limit has just been increased to $7,000 per year (from 2024) for those under 50. But people 50 and above have the chance to contribute an additional $1,000 annually, bringing the contribution limit up to $8,000.

Since many retirees fall into a lower tax bracket at some point during their retirement years, maximizing contributions to any tax-advantaged retirement accounts you maintain as you approach retirement is an excellent strategy.

2. Rebalance Your Investment Portfolio

In retirement, most people’s priorities shift. Your risk tolerance, time horizon, goals, and income needs in your retirement years are likely to be somewhat different from what they were during your career.

Taking withdrawals from your retirement accounts is just one approach. One of the best ways to prepare for retirement is to work with a financial planner to rebalance your asset allocations and investment strategies.

While individual needs and preferences may differ, many retirees benefit from allocating more of their investments toward lower-risk and income-producing assets. These may include:

Bonds
Dividend-paying stocks and funds
High-yield savings accounts and CDs
Rental properties or other real-estate investments

At Chatterton & Associates, our financial planners can help you determine the ideal strategies for rebalancing your portfolio to accommodate your changing needs.

3. Analyze Your Budget & Spending

Tracking expenses and managing your budget is an important component of personal finance for folks of all ages and stages of life. But if you’re approaching retirement and have been utilizing the same strategies for many years, now is the time to reevaluate your budget to ensure your spending habits align with your retirement goals and plans.

At Chatterton & Associates, we utilize advanced modeling software and retirement planning worksheets to help us identify where your money is going now and where it should be going in the future to best serve you and your loved ones in retirement.

4. Consider Delaying Social Security Benefits

Social Security benefits provide retirement income for nearly every American who has earned income over their lifetime through employment. While you may be eligible to begin receiving Social Security as early as 62, it’s often advantageous to delay taking benefits until 70. That’s because if you choose to retire later, you may have the option to earn a delayed retirement credit, which means your monthly social security checks will be larger throughout your retirement.

It’s also important to consider how your health insurance and other benefits may change in retirement. While you may no longer have access to employer-provided insurance, most Americans are eligible to sign up for Medicare coverage at the age of 65. If you have a pension through your employer or other benefits that extend into retirement, these are also important considerations.

5. Begin Preparing Your Estate

For many of our clients, retirement is a truly wonderful time of life. This is largely because it offers a chance to spend quality time with loved ones free from the pressures of career demands. If you have accumulated wealth that you want to pass on to your children, other loved ones, or to organizations near to your heart, our estate planning services are designed for you.

Don’t wait to start preparing your estate. Beginning the process early ensures you can spend your retirement focusing on what truly matters with the peace of mind that your assets will go to the people you love in the way you choose. We can help you plan to pass on your legacy by helping you:

Understand how investments and specific accounts (including IRAs and other retirement accounts) are inherited
Determine which kind of trust is right for you
Incorporate charitable giving into your estate-planning strategies
Create a plan that takes pressure off your loved ones

Prepare for a Comfortable, Prosperous Retirement with Chatterton & Associates

Figuring out how to prepare for financial wellbeing and freedom in retirement is an exciting, yet sometimes stressful process. Fortunately, there’s no shortage of effective retirement planning strategies that you can take advantage of to position yourself and your family effectively so you can focus on what matters most.

At Chatterton & Associates, we know there’s no one-size-fits all approach to retirement preparation. Successful retirement plans are comprehensive and highly individualized. Your strategies should be designed around your personal goals, lifestyle, and needs.

Our financial advisors are here to listen to your story, understand your unique challenges and goals, and help you plan for retirement in a way that works for you now and in the future.

Sincerely,

The Team at Chatterton & Associates