Approaching Retirement

Retirement is just over the horizon. How close are you to meeting your goals? It's time to take a look at the numbers and do some math, starting with how to plan for your actual retirement age.

Estimate your retirement age.

When you choose to exit the workforce may greatly influence your retirement needs and your financial status. If you have family obligations, such as children who need help with education expenses, a mortgage or other debts, this may affect the timing of how long you’ll need to work.

Delaying retirement by just a few years can help increase Social Security benefits and give you more time to invest your salary-based income. It will also affect how many years you’ll ultimately spend in retirement, and may reduce your overall needs. You also may want to consider important factors such as your health, lifestyle, and activities you want to spend time doing in retirement such as volunteer work or even working part-time.

Use the Janus Henderson Retirement Planner to help you plan for a variety of scenarios.

Maximize your contributions.

At age 50, the IRS allows additional contributions to your retirement. Extra contributions can be made to both your IRA and 401(k) or workplace retirement plan, in most cases. This is an opportunity to increase your investments and income possibilities.

VIEW IRS CONTRIBUTION LIMITS

Plan your cash flow.

Match your investments with a time-segmented approach. In typical time-segmentation plans, cash and conservative investments are used first. As time goes on, assets in more aggressive growth accounts are redeemed. This gives these assets more opportunity to grow.

Your cash flow will also be influenced by the availability of Social Security benefits, which are dependent on your retirement age, additional sources of income, pensions and any potential income from the sale of your home. How you tap your different retirement accounts can also have an effect on your cash flow. A good cash flow strategy factors in all of these variables.

Did you know that your employer-provided retirement plan can also continue to grow beyond retirement? Rolling these assets into a Janus Henderson IRA can be simple and either tax-deferred or tax-free, while potentially offering more control and less paperwork. Before moving your retirement assets, consider all available options and the applicable fees and features, such as leaving your assets in your former employer plan, rolling them over to a new employer plan, rolling them into an IRA or cashing out.

Consider fixed income.

As you near retirement, you may be looking for additional sources of income. Janus Henderson Fixed-Income Funds may be able to help.

A full picture of retirement includes how much you'll spend and how much you'll have.

Identify your expenses.

Housing was perhaps your largest expense pre-retirement, but you may have paid off a mortgage by now and your expenses have changed. It might be time to plan for other expenditures that could increase, like health care, hobbies or travel.

Identify your sources of income.

Social Security benefits

Understanding your projected income benefits from Social Security, pensions and annuities are important to strategically plan your income stream in retirement. While you may start applying for Social Security benefits at age 61 years, 9 months, you may increase your benefit by delaying this application up to a maximum age of 70. Use the Janus Henderson Social Security Estimator to estimate your benefits.

Pensions

If you worked for an organization that offered a pension plan, you will want to contact the plan administrator to learn how to tap into it and how much the benefit will be each month. If you're considering early retirement at age 55, distributions from an employer’s retirement plan may not be subject to an early withdrawal penalty, unlike a distribution from a traditional IRA.

Identify your benefits.

Healthcare

It's important to review your health care benefits, including Medicaid and Medicare so you can understand any gaps in coverage that will need to come out-of-pocket for medical visits, prescriptions, and long-term care needs. To learn more about your government healthcare benefits, visit medicare.gov and medicaid.gov.

Once you’ve added up these numbers, subtract your expenses from this income. If there’s a deficit between expenses and income, your retirement and non-retirement accounts will generally need to cover the difference. Once you’ve determined how much you're going to need, you're ready to plan your cash flow strategy to get the most out of you.