Countdown to Retirement

Your guide to the two years before the finish line

We typically start serious retirement planning with our clients in the 5 years leading up to their date of freedom. If you have retirement on the horizon, there are some things you need to be aware of and plan for. You only get one shot at this — you need to get it right.

Know Your Numbers

You need an accurate map of your financial assets and net worth. As an advisory client of Montage, we've been tracking this for you, and you have an up-to-date record in your Asset Map. This gives you a top-level view of all your assets, along with your current and future income sources.

Build a Spending Plan

You need a spending plan. How much will it cost you to live each month? Lay this out in “Adviceworks” and remember to include the expenses that only come once or twice a year — insurance, property tax, auto registration, and the like. This will give you a clear picture of what you'll need going forward as you start retirement. Alongside this, I recommend keeping a healthy cash position to weather the unexpected expenses that inevitably pop up: plumbing, air conditioning, auto repairs, and so on.

Social Security Timing

There are two key questions here: how much will you receive in your monthly benefit, and when should you start claiming Social Security? These two questions are interconnected and important to your financial planning. The age range to claim is 62 to 70. For each year you delay claiming past your full retirement age, your benefit increases by 8%. If your full retirement age is 67, delaying three years to age 70 results in a 24% increase to your benefit. A person due to receive $3,000 at 67 would see their monthly benefit grow by $720 by delaying to 70. That said, you also need to weigh the breakeven point — delaying means living long enough to make up for the income you didn't draw in those earlier years. Another consideration, should you draw against your assets rather than Social security benefit, is this a prudent move? The planning and numbers will answer this. Again, this is all about having the right information to make an informed decision.

Life Purpose

Now that you're no longer showing up at the workplace, who is your social group? What's going to motivate you to get up and get going in the morning? Maybe it's community service, or an organization you're already part of that you want to invest more time in. Maybe it's a hobby you've kept an interest in that you can now pursue with friends. The key is combining social interaction with brain function and physical activity. Activities like playing a musical instrument, sports, artwork, crafting, or running a small business engage both sides of the brain while keeping you socially connected — and that becomes increasingly important to brain health as we age.

Exercise

Ideally, you're exercising five days a week. Muscle mass deteriorates, balance declines, and joints need regular movement to stay in shape. Regular exercise becomes a priority — arguably the most important activity you do in retirement. Add to this a lifelong sport like golf, tennis, or pickleball, where you're moving and engaging both body and mind.

Health

Rather than investing in financial assets, your health is the best investment you can make at this stage of life. A longevity-focused checkup or clinic can pay off significantly by keeping you in optimal health and potentially helping you avoid bigger health issues down the road. If your health declines, how much can you really enjoy retirement if you're moving from one health event to the next?

Long-Term Care

You need some type of plan in place. That plan doesn't necessarily require insurance — it simply means you and your spouse have thought through what long-term care could look like and how you'd handle it financially. Some clients have sufficient cash flow to handle it on their own. Others plan to sell the home and move into a community that offers all levels of care. Others use insurance to offset the cost. Whatever solution fits you best, have a plan in place for how you'll handle it. (See our Montage article on long-term care planning for more.)

Daily Routine and Structure

Map out your day. Know what you're going to do and when you're going to do it. When you were working, your job provided that structure — now you have to create it for yourself.

Simplify

This doesn't have to happen overnight, but as you're talking with your children and grandchildren, you may discover items sitting on a shelf or in the garage collecting dust that carry a memory for someone else. Give it to them now. Let them enjoy it while you're still around to see that enjoyment — and simplify your life as you declutter your home. Research from the Princeton University Neuroscience Institute and the UCLA Center on Everyday Lives of Families shows that physical clutter overloads the brain's visual processing and raises stress hormone levels, which explains why clearing out the mess brings mental calm. This applies at home and at work alike.

Review Your Financial Plan

Reviewing your financial plan, estate and legacy plan, insurance plan, and investment plan two to three times a year is essential to keeping everything in order and up to date — especially when a life event occurs. That's the time to sit down with your advisor and reevaluate things. Revisit Schedule A in your trust documents at least once a year, and list out specifically who gets your personal property — or, as part of simplifying your life, consider passing those items along now. For more on this, see our Montage article, "The Yellow Plate," where we discuss this in more detail.

Bringing It All Together

Retirement isn't a single decision — it's a series of them, spanning your finances, your health, your relationships, and how you spend your days. The clients who transition into retirement most successfully are the ones who start thinking through these pieces well before their last day of work, not after. Whether it's mapping your assets, deciding when to claim Social Security, building a plan for long-term care, or simply figuring out what gets you out of bed in the morning, the goal is the same: walking into retirement with a plan instead of a guess.

If any of these areas feel unclear or unfinished, that's exactly what we're here for. Let's sit down, walk through where you stand, and build a plan that lets you step into this next chapter with confidence.

Keep More of What You Work For

Securities offered through Cetera Wealth Services, LLC, member FINRA/SIPC. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity. MONTAGE WEALTH ADVISORS - 3 Pointe Drive Ste 201, Brea, CA 92821 . This material is for informational purposes only and is not intended as tax, legal, or investment advice. Please consult with your tax advisor, attorney, or financial advisor regarding your specific situation before implementing any strategy discussed here.