Preparing to Retire Creating a Budget

As you get closer to retiring, revise your budget to ensure your savings goal is enough to sustain you through retirement. While every situation is unique, many financial experts suggest you plan for future costs of about 70 percent to 80 percent of your pre-retirement expenses.



Depending on desired lifestyle, unanticipated expenses and inflation, pinpointing a precise figure is difficult. Your best bet is to determine what you're likely to spend and plan for contingencies.

1

List and total all current expenses. Separate them into nondiscretionary (housing, taxes, transportation, food, clothing, healthcare, utilities, debts) and discretionary (entertainment, gifts, travel). Don't forget expenses that you may pay only once or twice a year, such as auto and homeowners insurance.

2

Evaluate how your spending will change. Will you be paying a mortgage or rent? Will transportation costs drop? What are your anticipated health insurance and healthcare costs? Are you planning to help children or grandchildren financially? What about hobbies and travel?

3

Work at reducing debt. Reduce or eliminate your debts before you retire. Start with any high-interest debt, paying that off before moving to others. Paying off a mortgage could free thousands of dollars each year in retirement, but be sure to talk to a tax advisor before taking this step. For some individuals, it may make more sense to keep paying a mortgage and get the mortgage interest tax break.*

4

Calculate expected retirement income. Add up any anticipated pensions, 401(k)s, Individual Retirement Accounts (IRAs), other employer-sponsored retirement plans, annuities and other sources of income. If you have a Thrift Savings Plan (TSP), figure out how much you can sensibly withdraw each year. Our Retirement Income Calculator can help.

5

Consider your Social Security strategy. While you can begin receiving benefits as early as age 62, doing so could mean a drastically and permanently reduced monthly check. It may make more sense to wait until your full retirement age to receive full benefits. If you wait until after full retirement age, your benefit will be even larger.

6

Compare expected income to expected expenses. After identifying your anticipated expenses and income, compare the two. Is there a shortfall? If so, you may need to reconsider some of your retirement plans. Perhaps you'll need to pare down travel, work a few more years or consider part-time employment.

7

Develop your estate plan. Even if your assets are modest, you should have a will, and if you have significant assets, it's a good idea to consult with an estate planner. Consider a living will and healthcare proxy to ensure your wishes are carried out in the event you're unable to communicate.

*Neither Navy Federal Credit Union nor any of its affiliates give tax advice. Consult a tax advisor or attorney for information specific to your situation.

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Roll over your existing accounts into a Navy Federal IRA.

Not sure where to start? Contact a financial advisor at 1-877-221-8108.


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Investors should carefully consider the investment objectives, risks, and charges and expenses associated with municipal fund securities before investing. This and other information about municipal fund securities is available in the issuer's official statement which can be obtained directly from the issuer, or if distributed through a broker dealer, may be obtained from a financial adviser, and should be read carefully before investing.

An investor should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.

If a municipal fund security describes one or more of their investment options as having the characteristics of a money market fund, it is important to know that an investment in the security is not insured or guaranteed by the FDIC or any other government agency (unless such guarantee is specifically provided by or on behalf of such issuer) and, if the security is held out as maintaining a stable net asset value, that although the issuer seeks to preserve the value of the investment at $1.00 per share or such other applicable fixed share price, it is possible to lose money by investing in the security.