Cleared for Takeoff

Cleared for Takeoff

July 06, 2023

Planning To Retire Within Five Years or so? Include These Three Exercises in Your Flight Plan

Whether you have a specific date in mind or not, choosing when to retire requires careful planning and preparation — even if you plan to continue working part-time. Here’s a preflight planning checklist that can help you navigate a few of the uncertainties and move ahead with confidence.

Buckle Up and Make Sure Your Budget Is in Its Upright Position

You’re first step is to get the most comprehensive, clear and accurate picture of your annual expenses that you can. For reference, collect your credit card statements and checking/savings account statements from the past 12 months (most banks and credit card companies let you download a yearly review of all your transactions organized into charts and graphs so you can get a clear look at your total annual spending). You may already have a good handle
on your biggest expenses each month, like housing, transportation, food, cable and cell phone. You’ll want to make sure to include other fixed costs, such as insurance (all coverages), haircuts or salon visits, gym memberships, streaming services, wellness exams and dental cleanings.

Perhaps the most important part of this step is to review all of your one-off and variable purchases to better understand how they can impact your overall yearly spend. Reviewing these transactions can show you how much you really spent on coffee, home improvement projects, online purchases, manicures and pedicures, dining out, spur-of-the-moment weekend getaways and other items. Really digging into your entire year-in-review can also help you notice patterns in your spending, like when there are increases around vacations, holidays, birthdays and other annual events.

Inspect Your Retirement Income Sources

Now that you know what you’ll need, it’s time to inspect any sources of income you can count on each month in retirement. Some examples include:

  • Social Security. This Social Security Quick Calculator lets you estimate your monthly benefit checks.
  • Income from rental properties
  • An annuity
  • A work pension
  • Withdrawals from retirement savings (a very general rule of thumb is to budget a 4% annual withdrawal rate from retirement accounts)

Avoid Turbulence With Healthcare Costs

While Medicare is a valuable benefit for those age 65 and older, it isn’t free and it doesn’t cover everything.
Health-care costs include deductibles, premiums and things Medicare doesn’t cover, such as prescription drugs, vision and dental care, hearing aids, home care and nursing homes. Therefore, before you retire:

  • Start saving money toward covering these potential costs
  • Enroll in a health savings account to help reduce taxes (if available)
  • Look into long-term-care insurance; it may be worthwhile if you are eligible and young enough to qualify for a reasonable rate
  • Do your research before signing up for Medicare. Will you choose Original Medicare and supplemental (“Medigap”) insurance? Or will you choose Medicare Advantage, a popular type of private insurance coverage? Sign up now for Medicare’s newsletter to get updates and stay informed regarding all your options.

We are happy to help, if you have any questions or would like additional insight, please feel free to reach out to me at or 800.307.0376.

Disclosure: This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.  The information provided has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.

Securities offered through LPL Financial Member FINRA/SIPC. Investment Advice offered through Diversified Financial Advisors, LLC, a registered Investment Advisor and a separate entity from LPL Financial.

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