Anyone planning on retirement in 2015 should make sure they have several items planned out before taking the plunge.
"You don't want to see people just stepping off a cliff into the big unknown," Cheryl Sherrard, director of financial planning at Clearview Wealth Management in Charlotte, N.C., tells The Wall Street Journal
"Planning and talking about the things that are ahead will make for a much smoother transition."
Journal reporter Tom Lauricella lists three areas that deserve retirees' attention.
- Social Security. You will generally receive far greater benefits if you wait until age 70 to take your payments. "It's hard to overstate how important this is," Cheryl Costa, financial planner at Forteris Wealth Management in Framingham, Mass., tells The Journal.
- Budgeting. Make sure to put away money for emergency expenses, such as healthcare. And try to figure out ways in which you can cut spending. Costa suggests living on your expected budget for at least six months before you retire to see if the budget is reasonable.
- Think about how you'll spend your time. "Many times people haven't thought about the non-financial sides of retirement," Sherrard notes.
Many Americans aren't prepared for retirement.
More than half the country's pre-retirement households — 52 percent — are at risk of being unable to maintain their current living standards when they retire, according the Center for Retirement Research at Boston College.
That estimate is for 2013, based on the most recent data from the Federal Reserve. The risk index was little changed from 53 percent in the last survey three years ago, but well above the 31 percent level for 1983.
"Our expectation was that the index would improve sharply in 2013," Alicia Munnell, the Center's director, writes in an article for MarketWatch
"It certainly felt like a better year than 2010. The stock market was up, and housing values were beginning to recover. But the ratio of wealth to income had not bounced back from the financial crisis."
Bottom line: "many Americans need to save more and/or work longer," Munnell says.
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