Spring Clean Your Finances: A Look at Your Retirement Plan

Last spring, we shared a blog about “spring cleaning” your finances. This spring, we’re revisiting the topic, but zooming in on a particularly important piece of your financial puzzle: your retirement plan.

Planning for retirement is of critical importance regardless of who you are, but it’s particularly important for women, as they tend to live longer and earn less than their male counterparts. As such, it’s smart to get in the habit of revisiting and reassessing your retirement plan annually.

Here we’re sharing five key areas of retirement planning to revisit this season.

Income

We talk about budgeting a lot at The Humphreys Group, and while it’s wise to live by a budget during your working years, it’s even more necessary to abide by one during retirement. In order to create a realistic budget, you’ll need to look at your expected income, which, for most retirees, will include savings, Social Security, and sometimes a pension. Based on your projected retirement income, will you have enough to cover your budget? Will it pay for the lifestyle you hope to maintain? If not, ask yourself what adjustments you might be able to make to change that, for example, upping your 401(k) contribution.

Investments

When it comes to investing, a great place to start is with assessing your risk tolerance. Women are typically more averse to risk than men, but there are other factors to consider as well, including age, long-term investment goals, and income level. Women who are nearing retirement age would probably be wise keep a higher percentage of their money in relatively safe accounts, while mid-career women might be able to take on a bit more risk. A professional financial advisor can prove invaluable as a sounding board and second opinion to address your concerns, help you plan accordingly, and rebalance your portfolio as appropriate.

Health Care

Health care is one of the most important — and largest — expenses to consider in retirement. It’s easy to assume that Medicare will cover your health expenses, but this is unfortunately not the case. What’s more, the entire Medicare process can be quite confusing, especially when you consider that most people supplement their Medicare plan with additional coverage for things like dental and vision coverage. While each person’s unique needs will ultimately dictate the health care route they take, women would be wise to think through their options early on to give themselves plenty of time to plan. One way you can prepare ahead of time? Do you homework on buying long-term care insurance or opening a health savings account (HSA).

Taxes

Another area to dedicate some thought to is taxes. Have you been dutifully saving a portion of each paycheck in an IRA or a 401(k)? While it’s great to have savings in these types of accounts, it’s important to remember that they are tax-deferred accounts, meaning that the withdrawals you make in retirement are taxed. That’s not to say that you don’t have options. One option is convert your traditional accounts to Roth accounts. With a Roth account, you’ll be required to pay taxes when you make the conversion, but the funds will then grow tax-free with no taxes on withdrawals after retirement. Just like with health care, there is no one-size-fits-all approach, but it’s important to be mindful of your options and give yourself time to plan and adjust your tax strategy.

Estate Plan

Finally, you’ll need to consider your legacy. Between a will, a living will, the assignment of a power of attorney, a health care proxy, beneficiaries, etc., your estate plan has various moving parts that need to be checked on from time to time. Go through your paperwork and make any necessary updates.

While revisiting your retirement plan is a smart move to make at any time of year, spring — the season of fresh starts — is a prime opportunity to check it off your to-do list. At The Humphreys Group, we specialize in working with everyday heroines to help them plan for their future. If you’d like a second opinion on your retirement plan this spring, reach out to our team!

Diane Bourdo, CFP®
Diane Bourdo, CFP®

Diane Bourdo is the President of The Humphreys Group. Diane has dedicated her life’s work to helping women make smart financial decisions. For nearly 30 years, she has developed investment management and financial planning strategies that allow her clients to create lives that reflect their values. Diane was named an InvestmentNews 2020 Women to Watch and has been recognized in Forbes, SF Chronicle, NY Times and more for her work and writing.

Diane Bourdo, CFP®
Diane Bourdo, CFP®

Diane Bourdo is the President of The Humphreys Group. Diane has dedicated her life’s work to helping women make smart financial decisions. For nearly 30 years, she has developed investment management and financial planning strategies that allow her clients to create lives that reflect their values. Diane was named an InvestmentNews 2020 Women to Watch and has been recognized in Forbes, SF Chronicle, NY Times and more for her work and writing.

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