Organizing Your Finances for Retirement

Updated on November 28, 2018

By Roger Ingwersen

The time has finally come – you’re getting ready to retire. But before you start thinking about life after retirement, it’s important to plan ahead, whether retirement is 30 years or 3 months from now.

Organizing for retirement will not only help you properly prepare, but also make you more comfortable with your retirement decision. By simplifying your finances, the transition to retirement will be much easier to manage.

One of the very first steps you want to take is an inventory of your goals. You can begin by making a list of your important short-term and long-term financial goals. For example, do you want to travel? And if so, how often and how expensive will the trips be? Do you plan on contributing to your children’s and/or grandchildren’s weddings? Do you want to buy a second vacation home? These are all important factors to consider as you prepare for retirement.

Step One: Compile the Data

In retirement, you will begin to pay yourself from the savings accumulated during your working years and to do this, it takes an organized approach.

The first step is listing out all of your retirement accounts, such as Social Security and a 401(k), as well as other savings and investment accounts. This will give you a better idea of the funds you have to work with. Listing out your accounts will also help you define whether or not you fully understand what your options are for each account – if not, your employer’s HR department should be able to answer any questions.   

Next, determine if there are any accounts you can combine – the less accounts you have to keep track of, the simpler and more organized it will be. For example, do you still have a 401(k) through your former employer and a Simple IRA with your current? See what your options are for combining the two.

Other important items to note are your insurance policies – life insurance, long term care insurance, and your liability insurance. You should also list any debts you may have and major assets such as your home, a vacation home, art, etc. Next, determine who owns the assets and debts, i.e. are they titled in your name or your spouse’s?

Once all of this data is compiled, you will have the information needed to create a net worth statement.

Step Two: Plan Your Expenses

Your next step is determining where your income will be coming from during your retirement years, such as pension income, Social Security, etc. To help with this decision, you should first determine a spending estimate.

A spending estimate can be split between essential living expenses such as housing costs and food, and non-essential living expenses such as vacations and electronics. In addition to the spending estimate, determine what is the timeline for these expenses – do you plan on taking vacations certain times of the year? Are you expected to pay for housing monthly or annually? These factors may be challenging to estimate early on, but they are important tasks to complete to feel secure about your finances.

In this final step, you should also draft a financial plan that will assess where you are today, what are your resources, what are your needs and your goals, and where can you go from there. The importance of this plan is to answer the questions: Can I retire when I want to? And if not, then what can I do to get back on track? Once the plan is completed, it is important to update it on a regular basis – this allows you to check your progress over time and evaluate if anything needs to change in order to meet your goals.

Taking these steps is a lot to do on your own, so having a professional financial advisor guide you through the process will relieve you of much of the stress. In addition, your advisor will help you make the right decisions at a critical time in your life – decisions such as when to begin collecting Social Security; which pension option is best for you and your family; and how best to invest the money to provide income and growth for your retirement years.


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