If you plan to retire in 2014, now is the time to get your retirement planning in order.
According to a new survey from financial services firm TIAA-CREF, 54 percent of Americans say they need help figuring out how to make their savings last throughout retirement. That's nearly 10 percent more than last year. Amy Podzius, TIAA-CREF financial consultant, offers these five steps for anyone on the verge of hanging up his or her work boots.
Decide on a Social Security strategy. Not very long ago, few people knew that Social Security required a strategy, but these days, with benefits playing a much bigger role in most people's retirement, deciding how to maximize what you and your spouse will get is key. Start with a good calculator. Your financial adviser should be able to provide access to one -- or you can find several good ones online. The most informative ones charge a small fee, but are worth the money.
Nail down the details. At least a year before you retire, figure out where your retirement income will come from and how much it will be, projected throughout your retirement. Talk to the administrator of any pensions for which you've qualified, and ascertain from your employer whether you are eligible for any severance or other final payments. Don't make any rash moves until you're satisfied that you'll have enough to live securely for the rest of your life.
Re-evaluate your investments. Podzius says that some people have a tendency to manage their money too conservatively, while others are still putting everything in equities -- a strategy that is generally way too risky for someone in retirement. Buying an annuity with a portion of your savings is another strategy worth exploring. "A financial adviser can help you strike the right balance," Podzius says.
Decide what you don't need. Most people have to make some spending cuts in retirement. Doing it before you leave the workplace gives you time to adjust. And consider a part-time job if that would make life better. Podzius suggests examining your basic budget closely. "Just spending $20 less per week on groceries adds up to $1,040 per year," she points out.
Map out your legacy. Do you want to leave money to family, friends, charity? Consider your goals and put plans into place, including trusts and life insurance.
Podzius says the one thing that gives many retirees the most financial flexibility is paying off their mortgage. Some people can't or don't want to, but for the majority, she thinks it is a can't-miss strategy.