“You may think you need a long and complicated list of tasks to accomplish your retirement goals. But a good place to start, is with these four simple steps.”
Vanguard recently published an article, “4 things to put on your to-do list for retirement prep,” which has a list of important items to consider when planning for retirement.
Determine what you need to save. Figure out some rough estimates for expenses you're likely to have, regardless of your plans, like housing, food, utility, and health care costs. You want to get a general idea of how much you'll need to meet those expenditures with income from Social Security, a pension or annuity and retirement or investment accounts.
Invest with a strong asset mix. Put your savings to work for your future through investing in the right mix of stocks, bonds and short-term cash reserves (asset allocation) based on your goals, the length of time before you'll need to use your savings and your comfort level for risk. Review and modify your investment portfolio regularly. Rebalancing should be designed to minimize risk as you get closer to your retirement date, not maximize returns.
If you fail to rebalance, your portfolio could become overweighted with one type of investment. This happens frequently with stock holdings when equity markets are strong. When stocks appreciate quickly and shift a portfolio's balance, it's more vulnerable to market corrections and that puts it at risk of greater potential losses when compared with the original asset allocation.
Consider taxes. The type of account where you have your assets can make a substantial difference in your tax liability. Investments that generate capital gains distributions or taxable income should be held in tax-advantaged accounts. Tax-efficient investments also make more sense if they are held in taxable accounts.
Get assistance. Use the skills of an estate planning attorney and a Certified Financial Planner™ (CFP®)
Checking these items off your to-do list, will help as you prepare for retirement.
Reference: Vanguard (May 15, 2017) “4 things to put on your to-do list for retirement prep”