You worked for 30 or 40 years and are at or approaching Social Security eligibility. Now you are looking at when to take Social Security to help maximize your benefits. What’s next?

You look at your retirement account statements and begin to wonder whether the investments you have are the right ones for where you are in life. You start weighing your options for making withdrawals from your retirement accounts. You’re uncertain about all of this and you’re nervous about the risk of a stock market pullback. Then you search the Internet for answers. Sound familiar?

What you do next is critical to your long-term success. The decisions you make now will help determine the course of your financial future, and it’s imperative to have a good plan to follow. Here are a few things that may help you get moving in the right direction.

• Calculate your income need. Sort through and total up all your expenses – fixed, discretionary, and irregular expenses (like travel). You will want to know how much money you spend over the course of a year. Realize that this spending amount will be for when you are retired – not while you’re working. Things are going to look different for you in retirement.
• Calculate your income gap. Once you’ve figured your income need, subtract it from Social Security or pension benefits, as well as any other sources of fixed income. This is your “income gap.”
• Identify the return needed on your investments. This calculation will tell you what yield you will need from your investments. This figure shouldn’t be more than 4-5% at most. If it is higher, then you may not be ready for retirement just yet. Remember that stretching your resources too far from the start will be setting yourself up for failure. This is not the time to be overly optimistic with your calculations.
• Inflation. The amount of money you will need today will be greater in the future due to the price of goods and services increasing over time.

You will most likely need two pools of retirement assets – one to help generate income you will need now, and another designated for income in the future.

• Find income-producing assets. How this is done can vary from person to person. If you’re wanting to remain active, you can consider taking on a part-time job or if you prefer not to work and want passive income, then you’re going to have to rely on income-oriented investments. This would be through annuities or bond-like instruments specifically designed for income.

It is always a good idea to work off a checklist, and regardless of where you are in the process, there are likely some adjustments that can help increase your probability for a successful retirement. We encourage you to formulate a plan that articulates where you are, where you’re going, and what needs to be done to start receiving the income you need. We invite you to schedule a complimentary consultation with one of our income specialists who can educate you on your options.