At some point in their lives, roughly 90 percent of women will be solely responsible for household financial decisions1, given the trends toward later marriage, divorce and widowhood; yet, only 43 percent of women actively participate in meetings with the family financial advisor.2 A financial advisor is an important resource for understanding your retirement income options, as well as creating a plan that incorporates your needs, wants and financial values. These four steps can help prepare you for that conversation:
1. Imagine your retirement
The interests you want to pursue in retirement—along with your health status—will dictate how much income you may need. For many, retirement has three distinct stages:
- Early: You may be traveling and enjoying hobbies that take advantage of your good health and newfound freedom. Such pursuits could be pricey, which means your income needs can be rather significant.
- Middle: You might find yourself slowing down to spend time with family and friends, requiring less income.
- Late: Medical issues are often at the forefront of this stage, making it more expensive. Exit from the workforce generally impacts retirement income as well. That’s why it’s important to have open conversations with your partner and family about what you imagine doing in retirement, such as traveling, working part time or launching an encore career.
2. Identify your sources of income
After decades of saving and investing, you might have multiple sources of income when you begin retirement. Some of these sources will be guaranteed (Social Security, pensions), while others are subject to fluctuations (traditional 401(k)s and IRAs, taxable savings and perhaps a rental property or two). Converting all of these sources into income can be complicated, so start by assessing all of your accounts, including those still held with previous employers. For simplicity’s sake, consider consolidating into as few accounts as possible. Because different types of accounts have different tax rules, it’s important to consult a tax professional to understand the how and when it makes sense to withdraw from each type. SunTrust’s SummitView® tool can also help your advisor create a retirement income plan that works for you.
3. Revisit your investment strategy
How you invest your money depends on where you are in your financial journey. Early in retirement, you may want to continue to invest a portion of your portfolio for growth, because you likely will spend decades in retirement. As you age, however, you may want to invest more conservatively to preserve the assets you’ve accumulated. Your advisor can work with you to create an investment strategy that can insulate your portfolio from common risks you might face in retirement such as longevity, inflation and market volatility.
4. Expect the unexpected
A well-laid plan is preferred, but be prepared to change course should life throw you a curveball. Medical issues and the cost of treatment can put demands on retirement income. And given women’s longer life spans, long-term care and how to pay for it should be given serious consideration. Also, think about how family dynamics might impact your retirement. The needs of aging parents, boomeranging children, divorce and widowhood can all alter your retirement income needs.