January > Retirement Corner
As a new year rolls in, many people start thinking about retirement. At some point, however, you'll need to bring your retirement into focus. Ideally, that’s about five years before you hope to retire (if not sooner)—when retirement is close enough to know what you want it to look like, and yet far enough away there’s still time to hone your strategy to help meet those goals or alter your plans. Here are five questions to ask—and begin answering—before you start planning your retirement party.
- What are your expectations?
It seems like a simple question. But in a 2009 survey of couples nearing retirement, more than 80% of couples disagreed about their retirement. And that may affect more than your marital happiness; it may affect when and how you’ll be able to retire. Five years before you plan to retire may be a good time to start thinking through the details and prioritizing your goals.
- Will you have enough?
This question nags many pre-retirees. With five years to go, you'll want to run some real numbers, either with help from an adviser or with a comprehensive tool such as the My Retirement Outlook, http://www.utsystem.edu/benefits/retirement/savingtools.htm, that will calculate what you can expect from your Teacher Retirement System (or Optional Retirement Program if you have balance information). This tool will help you calculate how much you should be saving in your voluntary UTSaver 403(b) Tax Sheltered Annuity or UTSaver 457(b) Deferred Compensation Plan.
- Are you invested properly?
As you round the bend toward retirement, you may not want to take on any more investment risk than necessary. But the consequences of being too conservative can be just as worrisome when you account for inflation and the possibility that you could outlive your savings. Part of the solution is smart asset allocation. To see what funds are available as an UT employee, visit the Fund Performance page at http://www.utsystem.edu/benefits/retirement/fundperformance.htm or contact an agent with one of the six approved retirement providers by visiting the approved provider’s page at: http://www.utsystem.edu/benefits/retirement/providers.htm.
- Where will your retirement “paycheck” come from?
At the same time you think about shoring up your nest egg, you need to begin thinking about how you'll convert some of your savings into income. For many people, it's helpful to start by grouping potential sources of income into three or four categories, such as income from a part-time job, current investment income, TRS income, annuity income, and income from any other assets, such as rental real estate.
- How does your home factor into your retirement?
Don’t neglect what is likely one of your largest assets: your home. If either downsizing or relocating is in your plans you may want to start plotting the move. With home prices in many parts of the country still depressed and mortgage rates near historic lows, it may behoove you to consider getting your foot in the door of your retirement home sooner rather than later. And while you may want to wait for the housing market to improve before you sell your current home, there are steps you can take to get your house ready for sale when the time is right.
Courtesy Fidelity Investments. For the full article, please visit https://guidance.fidelity.com/viewpoints/countdown-to-retirement.