Planning to Retire at the End of 2026? 3 Essential Moves to Make.
Key Points
Make sure you know how much annual income your savings can provide.
Figure out when to sign up for Social Security benefits.
Stress-test your plan for adverse market or economic conditions.
- The $23,760 Social Security bonus most retirees completely overlook ›
If you're planning to retire at the end of 2026, the countdown is officially on. And you should know that the moves you make in the coming months could have a huge impact on your long-term finances.
Before you make your retirement official, it's important to ensure you're in a good place financially. With that in mind, here are three key things to do if you're thinking you'll wrap up your career by Dec. 31.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
1. Create a retirement withdrawal strategy
You may be retiring with a decent chunk of money in your IRA or 401(k). But what annual income will that give you?
It's important to figure out what withdrawal rate you'll use to manage your savings. With a fairly even mix of stocks and bonds and a pretty typical retirement age, the popular 4% rule may be suitable for you. It has you withdrawing 4% of your savings in your first year of retirement and adjusting future withdrawals for inflation.
But you must run those calculations before retiring to make sure the numbers work. And if you have a different investment mix, you may need to play around with different withdrawal rates based on your portfolio composition.
2. Figure out when you'll claim Social Security
Social Security may end up being an important source of income during your retirement. So it's crucial to claim benefits at the most optimal time.
That doesn't necessarily mean delaying your claim for larger checks. There are a lot of factors that need to go into your filing decision, like your savings level, health, life expectancy, and goals. But it's important to have a sense of when you'll take benefits so you know how much Social Security to factor into your annual retirement income.
3. Stress-test your income plan
You may be planning to withdraw a certain sum of money from your portfolio each year. And you may be counting on a specific monthly Social Security check. Before you retire, it's important to stress-test your income plan and make sure it holds up in case things go awry.
If the market crashes, for example, you may need to reduce portfolio withdrawals. So it's important to ensure you can still cover your expenses in that scenario.
And if Social Security is forced to cut benefits, you may need to lean more on your portfolio to pay your expenses. Running these scenarios now could help you come up with a backup plan.
When retirement is super close, it's natural to get caught up in the excitement of bringing your career to a close. But before you do, take the time to figure out an income plan and make sure it holds up against unfavorable conditions. That should allow you to kick off retirement with a lot more confidence.
The $23,760 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.
One easy trick could pay you as much as $23,760 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Join Stock Advisor to learn more about these strategies.
View the "Social Security secrets" »
The Motley Fool has a disclosure policy.
Recommended Articles
