We’ve seen an increase in clients asking us if they can afford to retire.  While some could have retired years ago, many are clients who are looking to move up their retirement date.  This sudden interest in retirement is likely due to the pandemic; clients have experienced growth in their net worth from reduced spending combined with a strong stock market and are feeling COVID fatigue.


If you’re also considering retirement in the near future, know the answer to these questions before taking the leap:


What do you want to do in retirement? 

The first step that I recommend taking is determining what retirement looks like to you.  As they have with so many other things, Baby Boomers are rebelling against the standard and redefining retirement.  Many retirees are starting new careers, working part-time, volunteering, playing golf, or traveling the globe. 


There is no wrong way to retire, so create your own vision.  When you decide what retirement looks like for you, try to estimate an annual price tag.  You may find that your expenses will be vastly different from your friends’ or coworkers’- which is okay.  It’s your life, and you’ve worked hard to enjoy it.


Where will you live?

Retirees enjoy the freedom to move wherever they desire without a job or a young family tying them down to their current town. Retirees often move during retirement, with a decent portion moving out of state. Before deciding on a location:

  • Understand your budget and the local cost of living,
  • Take an extended vacation to the area to determine the best neighborhood for you, &
  • Find an appropriate home for you to live in throughout retirement, so you’re not moving again in ten years-moving doesn’t get easier with age.


How much income will you receive from Social Security?

Visit www.socialsecurity.gov/planners to get your estimated Social Security benefits.


Before deciding when to take Social Security income, consider your entire financial picture.  Depending on your tax bracket, other income sources, and investment account mix, you may benefit more in the long term by taking Social Security early.  It’s important not to evaluate your Social Security options in a silo- look at everything before deciding.


How much can you spend annually?

Take an estimate of your current expenses and modify those for changes you expect in retirement (such as more travel, fewer commuting expenses, higher healthcare costs, etc.).  After you get that total, subtract your estimated income from Social Security, pensions, and any other income streams you might receive.  What’s left is the amount of income you’ll need from your investments.


Generally, we suggest taking no more than 4% per year from your investment balance as income.  For example, if you need $40,000 per year to meet your income needs, then you’ll want to start retirement with at least $1million of total investments.


Make sure to pad your estimates for unanticipated expenses and potential healthcare costs in the future-especially if you don’t have long-term care insurance.


After you assess your goals, expenses, assets, and income, you should be able to determine if you can afford to retire.   Remember, retirement is unique to each individual/couple.  Determine what you want for yourself and create a strategy around your goals.


If you’re still concerned about your retirement projection, speak with a financial advisor who can create a custom retirement plan for you that considers the financial changes you’ll experience throughout retirement.   Your financial advisor should also partner with your CPA to help create an income plan that accounts for federal and state taxes.


The opinions voiced in this material are for informational purposes only and are not intended to provide specific advice to any individual.  Consult your legal, tax, and/or financial advisor to determine what is appropriate for your situation.

Investing in stocks is subject to risk including possible loss of principal.

Taking a specific percentage as income from your portfolio does not eliminate the risk that your money could run out.

As a Registered Investment Advisor (RIA), Partnership Wealth Management is committed to providing our clients with financial planning and wealth management services to help them work towards their financial goals. At Partnership Wealth Management, we have a long history of working with the LGBT community. Among the many services we offer are financial planning and estate planning strategies for gay and lesbian couples. Financial planning is an important part of preparing for the future; contact us today to get started: www.partnershipwm.com.

Author Profile

Woody Derricks, CFP®
Woody Derricks, CFP®
Throughout my nearly 20 years as a Financial Advisor, I have seen some of the best and worst markets in our history. That experience allows me to approach my clients with the knowledge of how the markets fit into their greater financial picture. At Partnership Wealth Management we help everyday people who have accumulated wealth make sense of what they have and work with them to maximize their financial opportunities in a relaxed, comfortable, and professional environment. While we help people from all walks of life, many of our clients are same-sex couples searching for a knowledgeable, LGBT-friendly financial advisor to help them with their unique financial planning needs. I am a CERTIFIED FINANCIAL PLANNER™ professional and have the Accredited Domestic Partnership Advisor(sm) designation. As a Registered Investment Advisor, we are not tied to any company’s investment products allowing us to provide unbiased advice by offering a wide array of investments and other products to our clients. Since 2001, I have been writing articles on financial planning for several regional newspapers and have been a guest speaker on LGBT financial issues for various local and national organizations. Additionally, I have conducted financial planning workshops for large corporations and government agencies. Non-Profit Work I believe that it is important to give back to the community and currently serve as the treasurer for FreeState Justice and as a co-founder/president of Paws for a Cause. I’m a current member of several LBGT, environmental, and local community groups. Personal My wife, Heidi and I enjoy camping, hiking, and traveling with our daughter, Elise, and our dogs, Fenway & Roxy. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.