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Pre-Retirement Checklist

From Principal Joshua Manifold

When you reach retirement, life often changes in ways you might not have anticipated. One of the best things you can do is start anticipating those changes well before they arrive. For those of you who are 3-5 years out from retirement, here are three changes to be thinking about.

1. Identity. As you leave behind your job, you also leave behind the task list, org charts, and structure. I commonly see retirees not realize how much of their identity was tied to those facets of their career. If you’re within three years of retiring, consider where you will find your sense of purpose, fulfillment, and structure once you make the transition. Ask the optimistic question: “How do I want to use my financial independence to impact the lives of others?”

2. Community. One key to a strong start in retirement is where you retire and who you retire near. I commonly hear statements like, “We wish the grandkids lived closer.” Or “We moved for a job, but much of our community is still in ____.” So, for you, are you currently living where you feel most connected to key relationships? Or should you start planning ahead to relocate once you retire?

3. Spending. This one catches many retirees by surprise. If you have spent your entire life earning and saving, it can be unsettling to start spending without income. Even with an exceptional plan, anxiety is common. If you’re approaching retirement, the best thing you can do is talk with your advisor. Give yourself the clarity of knowing how you’re positioned. Then, give yourself permission to rest from the worrying.

Retirement Savings: According to a recent AARP study, one-quarter of U.S. adults age 50 and older who are not yet retired say they expect never to retire, and 70% are concerned about prices rising faster than their income. The research released on Wednesday found that about one in four have no retirement savings, as those approaching retirement worry about how to make ends meet. Everyday expenses and housing costs are the biggest reasons people cannot save for retirement.

If you have questions about how to prepare for retirement, please get in touch with us today. We are happy to enter the conversation and offer suggestions as you develop a plan.

Mortgage Rates Above 7%: Home sales in March posted their biggest monthly drop in more than a year. This was coupled with mortgage rates that are coming in over 7%. According to mortgage finance giant Freddie Mac, the average rate on the standard 30-year fixed mortgage jumped nearly a quarter percentage point to 7.1%.

Home prices are also fairly high due to the ongoing inventory issue. On an annual basis, existing home sales, which comprise most of the housing market, fell 3.7% in March.

Intrafamily Loans: If you have a family member finding the current housing market problematic, an intrafamily loan may be an option. There are legal and tax implications that are vital to be aware of. If this is a path you are interested in pursuing, invite your CPA, attorney, and advisor to collaborate on the possibility and address the opportunity and risk. If you’re curious about an example of how this might work, we found this article from The Wall Street Journal a helpful illustration.