Financial advisor shares essential tips for pre-retirement planning
Updated: 3:23 PM PST Feb 19, 2025
Are you considering retirement in 2025? Hold off on making any bold moves just yet. Let’s hear from CAPTRUST Vice President and Financial Advisor, Kathryn McCall, who provides valuable insights for your retirement planning. What crucial factors should you consider before making such a significant decision? McCall emphasizes, “If you’re nearing your retirement date, focus on four key areas: your expected expenses, projected income, tax implications, and how you plan to utilize your time.”
How can you validate your anticipated spending in relation to your savings? McCall suggests starting with a budget: “Identify a bare-bones budget and create an additional fun budget. Ensure that both figures are consolidated to get a comprehensive view of your spending habits. From there, determine your income sources. For example, if you estimate needing $10,000 monthly during retirement, examine your income avenues such as Social Security, pensions, or rental income. If your income is projected to be $6,000 monthly, you’ll face a $4,000 shortfall. Over a year, that totals $48,000, meaning your portfolio needs to be sufficient to cover that amount, which leads to the conclusion that a retirement savings of about $1.2 million may be necessary.”
What about taxes? McCall explains, “A key strategy involves planning for how to withdraw funds from various accounts at different stages in retirement. For instance, you may have pre-tax savings from a 401(k) and Roth accounts. It’s crucial to choose the right account for withdrawals, particularly for larger expenses like vacations or new vehicles, in order to minimize tax burdens.”
Don’t forget to plan for enjoyable experiences as well. McCall adds, “It’s important to find fulfillment in retirement; otherwise, people often struggle with the transition. Focus on three vital components: engage in daily exercise, seek social interactions, and consider volunteering for causes you care about. Many studies highlight that maintaining connections with younger generations can contribute positively to longevity.”
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