5 Questions to Ask If You Are Ready for Retirement - Question 2

In our last blog post, we discussed the first question everyone needs to ask first when prepare for retirement - what does your retirement lifestyle look like?  Now question 2 -

How will you fund retirement? 

Below is a list of common financial resources available to fund your retirement:

• Taxable investment accounts
• Retirement accounts such as IRAs, 401(k) plans, 403(b)s and other workplace retirement plans
• Annuities
• Pensions including those from old employers
• Social Security
• Stock options or restricted stock units from their employer
• Interest in a business

There certainly could be other financial assets available for retirement as well.  The key here is to determine what type of ongoing retirement cash flow your various financial assets will translate into. This is also a good time to run financial planning projections to determine how much income can be supported and for how long.  Projections out to at least age 100 are certainly wise given increases in life expectancy.
Ideally, these questions should begin to be addressed at least 10 years prior to retirement and then revisited periodically as retirement gets closer.  If retirement cash cannot support the desired lifestyle then choices have to be made.  These might include working a bit longer, working part-time in retirement, reducing anticipated expenses and saving more in the remaining years until retirement.  The longer the time until retirement, the more time you will have to make any required adjustments to your financial plan.

Next blog post will discuss the third question.