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By Lee Sherbakoff, CPA/PFS, CFP®, RICP®

“To be seventy years young is sometimes far more cheerful and hopeful than to be forty years old.” — Oliver Wendell Holmes, Sr. (1)

If you were to write your autobiography, turning 70 might be in a chapter titled “The Golden Age of Retirement.” Now past the early transition years of retired life filled with a mix of emotions ranging from freedom and joy to stress and boredom, you’re settling into a well-deserved new chapter in life. 

Your idea of a happy retirement may include many things—traveling the world, spending more time with family and friends, relaxing, or even continuing to work—but worrying about your finances is likely not one of them. That doesn’t diminish the importance of checking in on your financial plan, however. In fact, it makes it that much more significant, especially at key chapters in life, because the confidence you gain from knowing your finances are on track will help you enjoy retired life to the fullest. Let’s go through this short list of questions to ask yourself to see how turning 70 may affect your financial plan and what you can do about it. 

Are You Receiving Social Security Benefits?

There is no exact right age to start receiving Social Security benefits, and many retirees choose to maximize their monthly benefits by delaying them until age 70. If you’ve been waiting to take Social Security to optimize your benefits, wait no longer. Your benefits won’t increase after age 70, and the longer you wait to enroll, the more money you’ll miss out on. Head to the Social Security Administration’s website to apply online

Has your 70th birthday already passed? That’s okay. The Social Security Administration will pay you retroactive benefits for up to 6 months after your birthday. 

Do You Have a Withdrawal Plan in Place?

If your 70th birthday is July 1, 2019, or later, you’ll need to start taking required minimum distributions (RMDs) from tax-advantaged retirement plans when you reach 72. (2) Because your taxable income will include those withdrawals, now is an excellent time to create or review your withdrawal strategy with tax efficiency in mind. 

As you approach age 72, make sure to set up your RMDs to receive your first distribution by April 1st of the year following your 72nd birthday and by December 31st every year after. Making any mistakes with RMDs as far as when, how much, and from which account you withdraw, even if unintentional, may incur stiff penalties on top of having to catch up on any distributions you missed. 

Does Your Investment Portfolio Need a Tune-Up?

As we enter new life chapters, our lifestyle goals, financial needs, and risk tolerance shift accordingly, making it essential to review your portfolio regularly. In the early years of retirement, you’re spending down your assets but still need them to last another 20 years or so. 

The goal is for your assets to last the rest of your lifetime, and to do that, it’s important to balance growth and capital preservation appropriately. Shifting your asset allocation to a more conservative portfolio to minimize risk may sacrifice the growth potential necessary to beat inflation. On the other hand, tilting the balance toward more growth to take advantage of potential returns may be taking on unnecessary risk.  

When Was the Last Time You Reviewed Your Estate Plan?

The first chapter of retirement is also a great time to review your estate plan and consider your legacy goals. Estate planning is valuable for most situations and most people, regardless of their level of wealth, if only to make it easier for family members and loved ones. With your estate attorney, review all aspects of your estate plan and update it if needed. The process includes:

  • Organizing all your important legal documents
  • Checking beneficiary designations
  • Identifying your legacy wishes
  • Determining tax optimization strategies 

Make sure to share your wishes and the location of important documents with your family to make it easier for them to act on your behalf and avoid any legal headaches. 

We Are Here to Help

At The Nalls Sherbakoff Group, we are proud to assist our clients in taking care of the financial aspects of retirement so they can focus on reaping the rewards of their years of hard work. If you have recently retired and want to ensure your finances are set up to carry you through your golden years, we’d love to help. Set up a complimentary appointment so we can see if our services are the right fit for you by calling us at (865) 691-0898 or contacting us online.

About Lee

Lee Sherbakoff is principal and financial advisor with The Nalls Sherbakoff Group, LLC, an independent, fee-only financial planning and investment management firm. He specializes in serving pre-retirees and retirees, helping them create and execute financial plans and retirement income plans that lead to sustainable long-term, real-life returns that meet their deepest and most important financial goals and objectives. Lee has a Bachelor of Science in Finance from The University of Tennessee and a Master of Strategic Studies from the U.S. Army War College as well as the Certified Public Accountant (CPA), Personal Financial Specialist (PFS), Certified Financial Planner™ (CFP®), and Retirement Income Certified Professional (RICP®) credentials. Lee spent over 31 years in the U.S. Army Reserves, including serving at the Army’s highest levels on the Department of Army staff at the Pentagon and being deployed in support of Operation Desert Storm (1991) and Operation Iraqi Freedom (2008-2009). When he’s not loyally serving his clients, Lee enjoys giving back to the community and to his profession. He served as a council member of the Tennessee Society of CPAs and is a member of the American Institute of CPAs. In addition, he is past President of the Knoxville Chapter of Tennessee Society of CPAs and past President of the East Tennessee chapter of the Financial Planning Association. To learn more about Lee, connect with him on LinkedIn.

DISCLOSURES: The information provided is for general informational purposes only and should not be considered an individualized recommendation of any particular security, strategy or investment product, and should not be construed as investment, legal, or tax advice. The Nalls Sherbakoff Group, LLC makes no warranties with regard to the information or results obtained by third parties and its use and disclaim any liability arising out of, or reliance on the information. These indexes reflect investments for a limited period of time and do not reflect performance in different economic or market cycles and are not intended to reflect the actual outcomes of any client of The Nalls Sherbakoff Group, LLC. Past performance does not guarantee future results.

(1) https://libquotes.com/oliver-wendell-holmes-sr/quote/lbo3v0u

(2) https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds