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You're on Your Way!

Once you have assessed all of your retirement income sources, your next step will be to identify where and when you will begin tapping into your assets. With some planning, you can design a regular flow of income that will take you through retirement.

To determine which income sources should be tapped before others, you'll want to examine your options with each asset carefully, as discussed in this guide.

Generally, it makes sense to begin withdrawing from your taxable investments before dipping into tax-sheltered investments (such as IRAs and 401(k) balances). That way, money in your tax-sheltered investments can continue to grow tax-deferred and be saved for use during the later years of retirement. On the other hand, IRAs and retirement plan benefits can be subject to large taxes upon your death. So, be sure to include tax and/or legal advice as part of your planning process. Some additional things to do as you near retirement:

  • Identify your team of professional advisors and, with their help, create a comprehensive long-term financial management plan specific to your needs and circumstances.
  • Keep all of your important documents together, including your will, and update them as necessary.
  • Be sure you have appropriate insurance coverage, and shop carefully for any insurance you will need during retirement (e.g., supplemental health insurance, long-term care insurance).
  • Do your research before making any major lifestyle changes, such as moving to a retirement community.
  • Consider how you plan to spend your time during retirement and how you will manage your lifestyle and relationships.

Give yourself plenty of time to appropriately plan for retirement. This is just the beginning of your fact-finding journey.

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