Counting Down: Financial Must-Dos in the 10 Years Before Retirement

What’s your plan for retirement? Whether you’re retiring at 67, 57, or another age, at some point, you will be ten years out from the beginning of your golden years. It’s very important to put a strategic plan in place in the decade before retirement. Strategic planning will help ensure that you can live comfortably in your retirement, work toward your desired goals, leave a legacy for children and grandchildren, and manage challenges in your last years, such as increased healthcare needs. 

Working with a CERTIFIED FINANCIAL PLANNER™ (CFP®) at Integra Wealth Management in Paramus, NJ, can help high-income earning and high-net-worth individuals pinpoint the most crucial steps in counting down the decade before retirement. Here is a brief overview of what you can expect us to do.

  1. Understand Your Current Financial Position

The first step in strategic planning for retirement is understanding your financial position right now. Your New Jersey financial advisor will thoroughly review your financial position, including your current income from all sources and your current expenses. We will also assess your current assets, liabilities, and net worth. (The latter is arrived at by subtracting your total liabilities from the worth of your assets.)

With that information, we can map out a plan for a retirement budget to help ensure that you have enough to meet your expenses in retirement. If you need to add to your retirement funds, you will know by how much.

Understanding your cash flow and net worth to plan for retirement is important. It’s a bit like fully understanding the terrain you’re in before you begin to map out a hike. You need to know where you are to effectively plan where you want to be. 

  1. Set Retirement Goals

Our next step will be identifying your retirement lifestyle goals. After all, if you want a second home on a tropical island in retirement and your neighbor wants to travel the world with grandchildren, you may have very different financial needs and associated costs.

Once we’ve discussed your retirement goals and objectives, we’ll tailor wealth management strategies to work toward achieving them. Our wealth management in New Jersey includes the management of cash, assets, retirement, estate planning, risk, and tax planning. 

  1. Manage Investment Risk 

Retirement funds are invested in asset classes, such as stocks and bonds, and alternative investments, such as precious metals, commodities, and private equity. 

Many of these assets fluctuate in price, which creates investment risk – that your portfolio will decline in price over the short term or not do as well as hoped. 

Financial and investment risk needs to be managed actively, but this is especially true in the decade before retirement. A severe drop in the stock market, for example, may negatively impact your retirement goals and even the timing of your retirement.

The comprehensive way to manage investment risk for high-net-worth individuals in Paramus, NJ, and elsewhere in the Garden State is to make sure that your portfolios are diversified appropriately. That’s also a suitable way to obtain growth and confidence in your investment portfolio.

  1. Maximize Retirement Savings

Our review of your cash flow and net worth, balanced against the estimated costs of your goals and needs in retirement, will indicate whether it would be prudent to increase your retirement savings during these ten years. If you do, we have plenty of tips for how to do it, all focusing on the importance of diversifying income streams and tax-efficient investing.

High-income earners in Paramus, NJ, might, for example, contribute the maximum to their 401(k) plans. For 2024, the maximum is $23,000; an additional $7,500 is allowed by the Internal Revenue Service for those 50 and over. Traditional 401(k) contributions are made pretax, lessening your tax liability in the contribution year. 

Another way to lessen your tax liability is to invest in Individual Retirement Accounts (IRAs). The maximum for 2024 is $7,000, with an additional $1,000 allowable if you’re 50 or over. 

  1. Review Estate Planning and Wealth Transfer

As you age, estate planning is a necessity. The essentials of estate planning generally include either a Last Will and Testament or a Trust to transfer wealth to your heirs and other beneficiaries. A wealth advisor in New Jersey will discuss which is most advantageous and efficient. It also includes legacy planning according to your and your family’s wishes.

Estate planning can include assisting in setting up powers of attorney for medical and financial decisions later in life, should you become incapacitated and unable to make these decisions.

  1. Health Care Planning

Retirement health care planning is a necessary part of the countdown to the golden years for two reasons. First, the increase in life expectancy over the past several decades has meant that retirees may live 30 or even 40 years after they retire. They will need health care during that time – and it’s likely they’ll need an increasing amount as time goes by. 

Second, healthcare costs have risen exponentially over the last several decades. Even for high earners, health care without sufficient insurance can cause significant decrements in retirement funds and net worth. 

As a result, the role of a New Jersey financial advisor is to integrate healthcare planning into your retirement strategy. In our review, we will estimate your healthcare costs in retirement and explore the most advantageous insurance options.

  1. Review and Adjust Plans Annually

Even in retirement, your financial decisions can’t be made in a “set and forget” manner. Your comprehensive financial plan should be reviewed annually with New Jersey financial planner(s). We will review whether your circumstances and goals have changed, review your investment choices versus goals and returns, rebalance your portfolios as necessary, and update any necessary part of your estate plan.

Throughout your pre-retirement and retirement years, we will keep adjusting strategies in response to life changes and financial market shifts.

Putting It All Together

Wealth management refers to the overall management of your assets, including cash, assets, retirement funds, tax planning, managing investment risk, and setting up estate planning strategies. It’s very important to work with a CFP® in New Jersey who understands and has the requisite experience in numerous aspects of wealth management.

Contact us to schedule a consultation with an experienced fiduciary financial advisor in advisory relationships in NJ at Integra Wealth Management.

Investment Management vs Wealth Management Integra Wealth Management
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. 
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
Richard Dragotta

More about the author: Richard Dragotta

Founder, Wealth Advisor - Rich is an esteemed 30+ year leader in the wealth management industry. His skill set includes all areas of wealth management execution, from practice development and compliance to operations, service delivery, workflow efficiency, marketing strategies, technology innovation, and human resources.

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