Estate Planning

The Essential Guide to Preparing for Retirement

Stephanie Booth

|

August 3, 2023

Trustworthy is an intelligent digital vault that protects and optimizes your family's information so that you can save time, money, and enjoy peace of mind.

The intelligent digital vault for families

Trustworthy protects and optimizes important family information so you can save time, money, and enjoy peace of mind

The biggest milestones in life rarely happen quickly.  Launching a career, buying a home, becoming a parent  — these momentous changes all take time. (And require lots of thoughtful decisions along the way.) Retirement is no different. It’s a significant (and exciting) change that’s best to plan for and work towards. In this Guide, we’ll walk you through what that timeline can look like. 

Key Takeaways:

  • Calculate your retirement income 

  • Envision your new retirement lifestyle

  • Plan for extenuating circumstances and learn how a professional financial planner can help

What Steps Can I Take to Prepare for Retirement?

It’s never too soon to imagine what your life will be like (financially and otherwise) once you stop working. The following steps can help you get the clearest picture:

Understand where your finances are right now. 

Add up your assets, including:

  • Your home value

  • Any other real estate 

  • Your car(s)

  • Checking and savings accounts

  • Bonds

  • Money market accounts

  • Pensions

  • Stocks 

  • Other investments

From that total, deduct everything that you owe, such as credit cards, mortgages, balances due on student loans, etc.

The result is your net worth. It’s not set in stone (especially if you’re still working full-time), but it can give you an idea of where you are now, financially. (And where you’d like to be.)

Check your Social Security. 

The Social Security Administration offers a personalized estimate of future benefits. Create an online account to see the distributions you’ll receive, based on how old you are once they start. Generally speaking, the longer you wait to claim your benefits, the more your payments are guaranteed to be.

Social Security benefits don’t include:

  • Investment earnings

  • Pensions

  • Annuities

  • Capital gains

  • Other government benefits

You’ll need to factor these sources of income separately. Be forewarned: each has its own specific quirks. For instance, returning to work after retirement can affect your pension and how much you pay for Medicare.

Take advantage of retirement accounts. 

Money trees don’t exist (yet!), but you still have plenty of options to grow your finances. When you’re preparing for retirement, some common ways to save include:

  • 401(k) 

    Many workplaces offer this type of account as an employee benefit. You’re able to directly deposit part of your paycheck, and that amount is deducted from your taxable annual income. You won’t pay taxes on it until you make a withdrawal.


    In 2023, you can contribute up to $22,500 to your 401(k). People who are 50 or older are also allowed to make catch-up contributions, which allow you to set aside even more of your earnings — in this case, an extra $7,500.

  • Traditional or Roth IRA

    Anyone can open an individual retirement account; unlike a 401(k), you don’t need an employer to sponsor you. In some cases, you can deduct contributions to a traditional IRA from your federal taxes. A Roth IRA uses after-tax dollars, which means you won’t pay taxes when you decide to withdraw funds.


    In 2023, the total amount you can contribute to all your traditional and Roth IRAs is $6,500 or your taxable income, if it’s lower. If you’re at least 50 years of age, you’re also allowed a catch-up contribution of $1,000. There’s no limit to contributions for people over 70 ½ years.


  • 403(b) and 457(b)

    These plans are often offered by government agencies and nonprofits. They operate a lot like 401(k)s, but a 457(b) lets you make a withdrawal without penalty if you leave your job.


    You can contribute $22,500 to a 403(b) in 2023. If you’re 50 or older at the end of the year, you can also make $7,500 in catch-up contributions.


    You’re allowed to contribute up to 100% of your compensation or $22,500 to a 457(b). Special catch-up contributions are also allowed, but restrictions depend on your plan and age.

  • HSA

    A Health Savings Account may not be the first (or second) plan you think about when you’re preparing for retirement, but it can be a great way to help defray expensive healthcare costs in the future. (More on that coming up.)


    Anyone with an HSA-eligible health plan can open an HSA. Like a 401(k), you’ll contribute pre-tax dollars and your employer may match them. Withdrawals that go towards qualified medical expenses, like prescriptions, won’t be taxed either. 


    You can contribute $3,850 for yourself or $7,750 for family coverage in 2023. At age 55, you’re also allowed $1,000 in catch-up contributions.

Figuring out which retirement plans are the best fit for you will depend on a number of factors, including your financial objectives and the time you have to achieve them. Here’s where talking  through your options with a financial planner could really come in handy. 

To help them understand where you are financially, you’ll need to share information about your current assets and debts. That can include:

  • Your most recent pay stubs

  • Bank statements

  • Investment accounts

  • Retirement plans 

  • Insurance policies

  • Mortgage details

  • Expected Social Security distributions

  • Loan balances (car, boat, etc.)

  • Credit card statements

  • Information about any businesses or subsidiaries you may own 

Gathering these documents doesn’t have to be time-consuming if you use Trustworthy. Our Family Operating System ® is the only online platform that can give a centralized view of your most important information. All major file types and media are supported, and we automatically arrange everything so you can easily find what you’re looking for. (We’re also the only online service for families that exceeds industry standards for security and privacy.)

Downsize Your Debt

Home mortgages, medical bills, student loans, credit card debts — even small balances on each of these accounts can add up. Before you officially retire, take steps to help downsize your debt..

For instance, you could:

  • Make a budget. 

    Take a look at where your money goes each month and consider any areas where you can save. Are you overpaying for car insurance? Can you cut back on some of those streaming services? Even small changes could financially improve your outlook over time.

  • Start saving for emergencies.

    Veterinarian bills. Car repairs. That last-minute plane ticket for a family emergency. When out-of-the-blue expenses arise, they’re rarely cheap. Try to put some money aside each month to address, or at least off-set, these types of unexpected financial burdens. That way, you won’t have to carry the balance (and pay interest) on a credit card.

  • Think about downsizing.

    If your current living costs are high, downsizing might benefit you. Moving to a smaller house, condo, or apartment can translate into lower utilities and taxes, cheaper maintenance, and fewer belongings.(Just make sure the savings will offset the actual costs of moving.)

  • Time your retirement wisely.

    Would pushing back your retirement a few years put you in a better financial position? What if you retired on time, then took a part-time job? Consider which conditions will set you up for success.

Consider Future Medical Costs

Unsurprisingly, health care costs are one of the most expensive hurdles you’ll face after retirement. According to the Fidelity Retiree Health Care Cost Estimate, an average retired 65-year-old couple needs $315,000 in savings (after taxes!) to cover health care premiums and associated costs.

Although Medicare coverage is guaranteed at age 65, like everything health care-related, it’s…. complicated. 

For instance:

  • Medicare A covers your hospital costs after a $1,600 deductible.

  • Medicare B is optional coverage for medical expenses — and costs on average, $164.90 each month.

  • Medicare Advantage plans are all-in-one plans that cover Parts A and B, and sometimes extra benefits, such as Part D (prescription drug coverage.)

  • Medigap policies are offered by private insurers to cover expenses Medicare doesn’t cover.

To make sure you can pay for the plans you choose, look into that aforementioned HSA.

How Can I Ensure My Retirement Income Will Be Enough?

It’s a bit of a guessing game, but for a quick general estimate, plug some numbers into an online retirement calculator. For instance, Nerdwallet’s algorithm assumes a 3% annual inflation rate, an annual 2% salary increase, and a 5% rate of return on investments.

While online retirement calculators aren’t foolproof, they can give you a sense of how close you are to the elusive benchmark of “enough.”

Many financial planners subscribe to what’s called the “rule of 4%.” Take your estimated monthly expenses (be as accurate as you can) and divide that number by 4. For instance, if you estimate that you’ll need $60,000 a year after you retire, your ideal retirement savings would be a cool $1.5 million.

How Will You Spend Your Retirement?

Retirement, of course, is about more than your financial health. It’s about your quality of life as well. 

To make the most of this new chapter, you might want to think about:

  • Expanding your social circle

    There’s a risk of becoming isolated after retirement. Experts recommend making regular dates with friends, joining a gym, taking classes at a local college, checking out online communities — in short, surrounding yourself with people and activities that make you happy.

  • Volunteering

    Helping others will not only keep you active, but boost your psychological well-being and offer protection from depression.

  • Getting a job

    According to AARP, more than 20 percent of people age 65 or older are back at work or looking for employment. Even a part-time job after retirement can increase your monthly income and provide a meaningful sense of purpose.

(Just keep in mind: How much you earn can impact your Social Security benefits. The Social Security Administration’s Retirement Earnings Test Calculator can help you do the math.)

Where Will You Retire?

An entire cottage industry, including quizzes, magazines, books, and online rankings, is built around where you should live after retirement. (And the “top” spots constantly fluctuate.) To find the location that’s the best fit for you, consider these four factors:

  • Cost of living: Can you comfortably afford housing costs, groceries, and gas bills in an area? Or will they be too expensive for your budget?

  • Quality of life: How well does a specific locale fit your needs, be that easy access to nature, being close to your grandchildren, or a thriving arts community?

  • Climate: The more you love a certain type of weather, the happier you’ll feel living there.

  • Taxes: Take a look at taxes from the state level to county and city rates. How much will you be saving — or paying — in a certain area? 

Once you have a short list of places, consider doing a trial run. A short vacation can give you a sense of what your post-retirement life could look like and help you make some important decisions.

What Else Can You Do to Prepare for Retirement?

Keep these two last pieces of advice in mind.

Always have a back-up plan. (Or two or three.)

Among the post-retirement challenges you may encounter are:

  • Unexpected health issues and medical bills

  • Family members who need personal or financial support

  • Change in marital status

  • Change in housing needs

  • Rising healthcare costs

  • Stock market risks

  • Inflation 

  • Business risks (like a loss of your pension plan fund)

  • Changes to Social Security and Medicare distributions

  • Longevity risk (Living longer than you — or your savings — expected!)

While it’s impossible to plan for every drawback, a professional financial planner can help you game out some contingency plans.

Get excited and inspired. 

Consider preparing for retirement the beginning of a new adventure.  What are you ready to learn? What would you like to do? (Or finally stop doing?) Keeping these aspirations in mind will make it easier for you to reach your financial goals — and inspire you to begin this next chapter.

Estate Planning

The Essential Guide to Preparing for Retirement

Stephanie Booth

|

August 3, 2023

Trustworthy is an intelligent digital vault that protects and optimizes your family's information so that you can save time, money, and enjoy peace of mind.

The biggest milestones in life rarely happen quickly.  Launching a career, buying a home, becoming a parent  — these momentous changes all take time. (And require lots of thoughtful decisions along the way.) Retirement is no different. It’s a significant (and exciting) change that’s best to plan for and work towards. In this Guide, we’ll walk you through what that timeline can look like. 

Key Takeaways:

  • Calculate your retirement income 

  • Envision your new retirement lifestyle

  • Plan for extenuating circumstances and learn how a professional financial planner can help

What Steps Can I Take to Prepare for Retirement?

It’s never too soon to imagine what your life will be like (financially and otherwise) once you stop working. The following steps can help you get the clearest picture:

Understand where your finances are right now. 

Add up your assets, including:

  • Your home value

  • Any other real estate 

  • Your car(s)

  • Checking and savings accounts

  • Bonds

  • Money market accounts

  • Pensions

  • Stocks 

  • Other investments

From that total, deduct everything that you owe, such as credit cards, mortgages, balances due on student loans, etc.

The result is your net worth. It’s not set in stone (especially if you’re still working full-time), but it can give you an idea of where you are now, financially. (And where you’d like to be.)

Check your Social Security. 

The Social Security Administration offers a personalized estimate of future benefits. Create an online account to see the distributions you’ll receive, based on how old you are once they start. Generally speaking, the longer you wait to claim your benefits, the more your payments are guaranteed to be.

Social Security benefits don’t include:

  • Investment earnings

  • Pensions

  • Annuities

  • Capital gains

  • Other government benefits

You’ll need to factor these sources of income separately. Be forewarned: each has its own specific quirks. For instance, returning to work after retirement can affect your pension and how much you pay for Medicare.

Take advantage of retirement accounts. 

Money trees don’t exist (yet!), but you still have plenty of options to grow your finances. When you’re preparing for retirement, some common ways to save include:

  • 401(k) 

    Many workplaces offer this type of account as an employee benefit. You’re able to directly deposit part of your paycheck, and that amount is deducted from your taxable annual income. You won’t pay taxes on it until you make a withdrawal.


    In 2023, you can contribute up to $22,500 to your 401(k). People who are 50 or older are also allowed to make catch-up contributions, which allow you to set aside even more of your earnings — in this case, an extra $7,500.

  • Traditional or Roth IRA

    Anyone can open an individual retirement account; unlike a 401(k), you don’t need an employer to sponsor you. In some cases, you can deduct contributions to a traditional IRA from your federal taxes. A Roth IRA uses after-tax dollars, which means you won’t pay taxes when you decide to withdraw funds.


    In 2023, the total amount you can contribute to all your traditional and Roth IRAs is $6,500 or your taxable income, if it’s lower. If you’re at least 50 years of age, you’re also allowed a catch-up contribution of $1,000. There’s no limit to contributions for people over 70 ½ years.


  • 403(b) and 457(b)

    These plans are often offered by government agencies and nonprofits. They operate a lot like 401(k)s, but a 457(b) lets you make a withdrawal without penalty if you leave your job.


    You can contribute $22,500 to a 403(b) in 2023. If you’re 50 or older at the end of the year, you can also make $7,500 in catch-up contributions.


    You’re allowed to contribute up to 100% of your compensation or $22,500 to a 457(b). Special catch-up contributions are also allowed, but restrictions depend on your plan and age.

  • HSA

    A Health Savings Account may not be the first (or second) plan you think about when you’re preparing for retirement, but it can be a great way to help defray expensive healthcare costs in the future. (More on that coming up.)


    Anyone with an HSA-eligible health plan can open an HSA. Like a 401(k), you’ll contribute pre-tax dollars and your employer may match them. Withdrawals that go towards qualified medical expenses, like prescriptions, won’t be taxed either. 


    You can contribute $3,850 for yourself or $7,750 for family coverage in 2023. At age 55, you’re also allowed $1,000 in catch-up contributions.

Figuring out which retirement plans are the best fit for you will depend on a number of factors, including your financial objectives and the time you have to achieve them. Here’s where talking  through your options with a financial planner could really come in handy. 

To help them understand where you are financially, you’ll need to share information about your current assets and debts. That can include:

  • Your most recent pay stubs

  • Bank statements

  • Investment accounts

  • Retirement plans 

  • Insurance policies

  • Mortgage details

  • Expected Social Security distributions

  • Loan balances (car, boat, etc.)

  • Credit card statements

  • Information about any businesses or subsidiaries you may own 

Gathering these documents doesn’t have to be time-consuming if you use Trustworthy. Our Family Operating System ® is the only online platform that can give a centralized view of your most important information. All major file types and media are supported, and we automatically arrange everything so you can easily find what you’re looking for. (We’re also the only online service for families that exceeds industry standards for security and privacy.)

Downsize Your Debt

Home mortgages, medical bills, student loans, credit card debts — even small balances on each of these accounts can add up. Before you officially retire, take steps to help downsize your debt..

For instance, you could:

  • Make a budget. 

    Take a look at where your money goes each month and consider any areas where you can save. Are you overpaying for car insurance? Can you cut back on some of those streaming services? Even small changes could financially improve your outlook over time.

  • Start saving for emergencies.

    Veterinarian bills. Car repairs. That last-minute plane ticket for a family emergency. When out-of-the-blue expenses arise, they’re rarely cheap. Try to put some money aside each month to address, or at least off-set, these types of unexpected financial burdens. That way, you won’t have to carry the balance (and pay interest) on a credit card.

  • Think about downsizing.

    If your current living costs are high, downsizing might benefit you. Moving to a smaller house, condo, or apartment can translate into lower utilities and taxes, cheaper maintenance, and fewer belongings.(Just make sure the savings will offset the actual costs of moving.)

  • Time your retirement wisely.

    Would pushing back your retirement a few years put you in a better financial position? What if you retired on time, then took a part-time job? Consider which conditions will set you up for success.

Consider Future Medical Costs

Unsurprisingly, health care costs are one of the most expensive hurdles you’ll face after retirement. According to the Fidelity Retiree Health Care Cost Estimate, an average retired 65-year-old couple needs $315,000 in savings (after taxes!) to cover health care premiums and associated costs.

Although Medicare coverage is guaranteed at age 65, like everything health care-related, it’s…. complicated. 

For instance:

  • Medicare A covers your hospital costs after a $1,600 deductible.

  • Medicare B is optional coverage for medical expenses — and costs on average, $164.90 each month.

  • Medicare Advantage plans are all-in-one plans that cover Parts A and B, and sometimes extra benefits, such as Part D (prescription drug coverage.)

  • Medigap policies are offered by private insurers to cover expenses Medicare doesn’t cover.

To make sure you can pay for the plans you choose, look into that aforementioned HSA.

How Can I Ensure My Retirement Income Will Be Enough?

It’s a bit of a guessing game, but for a quick general estimate, plug some numbers into an online retirement calculator. For instance, Nerdwallet’s algorithm assumes a 3% annual inflation rate, an annual 2% salary increase, and a 5% rate of return on investments.

While online retirement calculators aren’t foolproof, they can give you a sense of how close you are to the elusive benchmark of “enough.”

Many financial planners subscribe to what’s called the “rule of 4%.” Take your estimated monthly expenses (be as accurate as you can) and divide that number by 4. For instance, if you estimate that you’ll need $60,000 a year after you retire, your ideal retirement savings would be a cool $1.5 million.

How Will You Spend Your Retirement?

Retirement, of course, is about more than your financial health. It’s about your quality of life as well. 

To make the most of this new chapter, you might want to think about:

  • Expanding your social circle

    There’s a risk of becoming isolated after retirement. Experts recommend making regular dates with friends, joining a gym, taking classes at a local college, checking out online communities — in short, surrounding yourself with people and activities that make you happy.

  • Volunteering

    Helping others will not only keep you active, but boost your psychological well-being and offer protection from depression.

  • Getting a job

    According to AARP, more than 20 percent of people age 65 or older are back at work or looking for employment. Even a part-time job after retirement can increase your monthly income and provide a meaningful sense of purpose.

(Just keep in mind: How much you earn can impact your Social Security benefits. The Social Security Administration’s Retirement Earnings Test Calculator can help you do the math.)

Where Will You Retire?

An entire cottage industry, including quizzes, magazines, books, and online rankings, is built around where you should live after retirement. (And the “top” spots constantly fluctuate.) To find the location that’s the best fit for you, consider these four factors:

  • Cost of living: Can you comfortably afford housing costs, groceries, and gas bills in an area? Or will they be too expensive for your budget?

  • Quality of life: How well does a specific locale fit your needs, be that easy access to nature, being close to your grandchildren, or a thriving arts community?

  • Climate: The more you love a certain type of weather, the happier you’ll feel living there.

  • Taxes: Take a look at taxes from the state level to county and city rates. How much will you be saving — or paying — in a certain area? 

Once you have a short list of places, consider doing a trial run. A short vacation can give you a sense of what your post-retirement life could look like and help you make some important decisions.

What Else Can You Do to Prepare for Retirement?

Keep these two last pieces of advice in mind.

Always have a back-up plan. (Or two or three.)

Among the post-retirement challenges you may encounter are:

  • Unexpected health issues and medical bills

  • Family members who need personal or financial support

  • Change in marital status

  • Change in housing needs

  • Rising healthcare costs

  • Stock market risks

  • Inflation 

  • Business risks (like a loss of your pension plan fund)

  • Changes to Social Security and Medicare distributions

  • Longevity risk (Living longer than you — or your savings — expected!)

While it’s impossible to plan for every drawback, a professional financial planner can help you game out some contingency plans.

Get excited and inspired. 

Consider preparing for retirement the beginning of a new adventure.  What are you ready to learn? What would you like to do? (Or finally stop doing?) Keeping these aspirations in mind will make it easier for you to reach your financial goals — and inspire you to begin this next chapter.

Estate Planning

The Essential Guide to Preparing for Retirement

Stephanie Booth

|

August 3, 2023

Trustworthy is an intelligent digital vault that protects and optimizes your family's information so that you can save time, money, and enjoy peace of mind.

The intelligent digital vault for families

Trustworthy protects and optimizes important family information so you can save time, money, and enjoy peace of mind

The biggest milestones in life rarely happen quickly.  Launching a career, buying a home, becoming a parent  — these momentous changes all take time. (And require lots of thoughtful decisions along the way.) Retirement is no different. It’s a significant (and exciting) change that’s best to plan for and work towards. In this Guide, we’ll walk you through what that timeline can look like. 

Key Takeaways:

  • Calculate your retirement income 

  • Envision your new retirement lifestyle

  • Plan for extenuating circumstances and learn how a professional financial planner can help

What Steps Can I Take to Prepare for Retirement?

It’s never too soon to imagine what your life will be like (financially and otherwise) once you stop working. The following steps can help you get the clearest picture:

Understand where your finances are right now. 

Add up your assets, including:

  • Your home value

  • Any other real estate 

  • Your car(s)

  • Checking and savings accounts

  • Bonds

  • Money market accounts

  • Pensions

  • Stocks 

  • Other investments

From that total, deduct everything that you owe, such as credit cards, mortgages, balances due on student loans, etc.

The result is your net worth. It’s not set in stone (especially if you’re still working full-time), but it can give you an idea of where you are now, financially. (And where you’d like to be.)

Check your Social Security. 

The Social Security Administration offers a personalized estimate of future benefits. Create an online account to see the distributions you’ll receive, based on how old you are once they start. Generally speaking, the longer you wait to claim your benefits, the more your payments are guaranteed to be.

Social Security benefits don’t include:

  • Investment earnings

  • Pensions

  • Annuities

  • Capital gains

  • Other government benefits

You’ll need to factor these sources of income separately. Be forewarned: each has its own specific quirks. For instance, returning to work after retirement can affect your pension and how much you pay for Medicare.

Take advantage of retirement accounts. 

Money trees don’t exist (yet!), but you still have plenty of options to grow your finances. When you’re preparing for retirement, some common ways to save include:

  • 401(k) 

    Many workplaces offer this type of account as an employee benefit. You’re able to directly deposit part of your paycheck, and that amount is deducted from your taxable annual income. You won’t pay taxes on it until you make a withdrawal.


    In 2023, you can contribute up to $22,500 to your 401(k). People who are 50 or older are also allowed to make catch-up contributions, which allow you to set aside even more of your earnings — in this case, an extra $7,500.

  • Traditional or Roth IRA

    Anyone can open an individual retirement account; unlike a 401(k), you don’t need an employer to sponsor you. In some cases, you can deduct contributions to a traditional IRA from your federal taxes. A Roth IRA uses after-tax dollars, which means you won’t pay taxes when you decide to withdraw funds.


    In 2023, the total amount you can contribute to all your traditional and Roth IRAs is $6,500 or your taxable income, if it’s lower. If you’re at least 50 years of age, you’re also allowed a catch-up contribution of $1,000. There’s no limit to contributions for people over 70 ½ years.


  • 403(b) and 457(b)

    These plans are often offered by government agencies and nonprofits. They operate a lot like 401(k)s, but a 457(b) lets you make a withdrawal without penalty if you leave your job.


    You can contribute $22,500 to a 403(b) in 2023. If you’re 50 or older at the end of the year, you can also make $7,500 in catch-up contributions.


    You’re allowed to contribute up to 100% of your compensation or $22,500 to a 457(b). Special catch-up contributions are also allowed, but restrictions depend on your plan and age.

  • HSA

    A Health Savings Account may not be the first (or second) plan you think about when you’re preparing for retirement, but it can be a great way to help defray expensive healthcare costs in the future. (More on that coming up.)


    Anyone with an HSA-eligible health plan can open an HSA. Like a 401(k), you’ll contribute pre-tax dollars and your employer may match them. Withdrawals that go towards qualified medical expenses, like prescriptions, won’t be taxed either. 


    You can contribute $3,850 for yourself or $7,750 for family coverage in 2023. At age 55, you’re also allowed $1,000 in catch-up contributions.

Figuring out which retirement plans are the best fit for you will depend on a number of factors, including your financial objectives and the time you have to achieve them. Here’s where talking  through your options with a financial planner could really come in handy. 

To help them understand where you are financially, you’ll need to share information about your current assets and debts. That can include:

  • Your most recent pay stubs

  • Bank statements

  • Investment accounts

  • Retirement plans 

  • Insurance policies

  • Mortgage details

  • Expected Social Security distributions

  • Loan balances (car, boat, etc.)

  • Credit card statements

  • Information about any businesses or subsidiaries you may own 

Gathering these documents doesn’t have to be time-consuming if you use Trustworthy. Our Family Operating System ® is the only online platform that can give a centralized view of your most important information. All major file types and media are supported, and we automatically arrange everything so you can easily find what you’re looking for. (We’re also the only online service for families that exceeds industry standards for security and privacy.)

Downsize Your Debt

Home mortgages, medical bills, student loans, credit card debts — even small balances on each of these accounts can add up. Before you officially retire, take steps to help downsize your debt..

For instance, you could:

  • Make a budget. 

    Take a look at where your money goes each month and consider any areas where you can save. Are you overpaying for car insurance? Can you cut back on some of those streaming services? Even small changes could financially improve your outlook over time.

  • Start saving for emergencies.

    Veterinarian bills. Car repairs. That last-minute plane ticket for a family emergency. When out-of-the-blue expenses arise, they’re rarely cheap. Try to put some money aside each month to address, or at least off-set, these types of unexpected financial burdens. That way, you won’t have to carry the balance (and pay interest) on a credit card.

  • Think about downsizing.

    If your current living costs are high, downsizing might benefit you. Moving to a smaller house, condo, or apartment can translate into lower utilities and taxes, cheaper maintenance, and fewer belongings.(Just make sure the savings will offset the actual costs of moving.)

  • Time your retirement wisely.

    Would pushing back your retirement a few years put you in a better financial position? What if you retired on time, then took a part-time job? Consider which conditions will set you up for success.

Consider Future Medical Costs

Unsurprisingly, health care costs are one of the most expensive hurdles you’ll face after retirement. According to the Fidelity Retiree Health Care Cost Estimate, an average retired 65-year-old couple needs $315,000 in savings (after taxes!) to cover health care premiums and associated costs.

Although Medicare coverage is guaranteed at age 65, like everything health care-related, it’s…. complicated. 

For instance:

  • Medicare A covers your hospital costs after a $1,600 deductible.

  • Medicare B is optional coverage for medical expenses — and costs on average, $164.90 each month.

  • Medicare Advantage plans are all-in-one plans that cover Parts A and B, and sometimes extra benefits, such as Part D (prescription drug coverage.)

  • Medigap policies are offered by private insurers to cover expenses Medicare doesn’t cover.

To make sure you can pay for the plans you choose, look into that aforementioned HSA.

How Can I Ensure My Retirement Income Will Be Enough?

It’s a bit of a guessing game, but for a quick general estimate, plug some numbers into an online retirement calculator. For instance, Nerdwallet’s algorithm assumes a 3% annual inflation rate, an annual 2% salary increase, and a 5% rate of return on investments.

While online retirement calculators aren’t foolproof, they can give you a sense of how close you are to the elusive benchmark of “enough.”

Many financial planners subscribe to what’s called the “rule of 4%.” Take your estimated monthly expenses (be as accurate as you can) and divide that number by 4. For instance, if you estimate that you’ll need $60,000 a year after you retire, your ideal retirement savings would be a cool $1.5 million.

How Will You Spend Your Retirement?

Retirement, of course, is about more than your financial health. It’s about your quality of life as well. 

To make the most of this new chapter, you might want to think about:

  • Expanding your social circle

    There’s a risk of becoming isolated after retirement. Experts recommend making regular dates with friends, joining a gym, taking classes at a local college, checking out online communities — in short, surrounding yourself with people and activities that make you happy.

  • Volunteering

    Helping others will not only keep you active, but boost your psychological well-being and offer protection from depression.

  • Getting a job

    According to AARP, more than 20 percent of people age 65 or older are back at work or looking for employment. Even a part-time job after retirement can increase your monthly income and provide a meaningful sense of purpose.

(Just keep in mind: How much you earn can impact your Social Security benefits. The Social Security Administration’s Retirement Earnings Test Calculator can help you do the math.)

Where Will You Retire?

An entire cottage industry, including quizzes, magazines, books, and online rankings, is built around where you should live after retirement. (And the “top” spots constantly fluctuate.) To find the location that’s the best fit for you, consider these four factors:

  • Cost of living: Can you comfortably afford housing costs, groceries, and gas bills in an area? Or will they be too expensive for your budget?

  • Quality of life: How well does a specific locale fit your needs, be that easy access to nature, being close to your grandchildren, or a thriving arts community?

  • Climate: The more you love a certain type of weather, the happier you’ll feel living there.

  • Taxes: Take a look at taxes from the state level to county and city rates. How much will you be saving — or paying — in a certain area? 

Once you have a short list of places, consider doing a trial run. A short vacation can give you a sense of what your post-retirement life could look like and help you make some important decisions.

What Else Can You Do to Prepare for Retirement?

Keep these two last pieces of advice in mind.

Always have a back-up plan. (Or two or three.)

Among the post-retirement challenges you may encounter are:

  • Unexpected health issues and medical bills

  • Family members who need personal or financial support

  • Change in marital status

  • Change in housing needs

  • Rising healthcare costs

  • Stock market risks

  • Inflation 

  • Business risks (like a loss of your pension plan fund)

  • Changes to Social Security and Medicare distributions

  • Longevity risk (Living longer than you — or your savings — expected!)

While it’s impossible to plan for every drawback, a professional financial planner can help you game out some contingency plans.

Get excited and inspired. 

Consider preparing for retirement the beginning of a new adventure.  What are you ready to learn? What would you like to do? (Or finally stop doing?) Keeping these aspirations in mind will make it easier for you to reach your financial goals — and inspire you to begin this next chapter.

Estate Planning

The Essential Guide to Preparing for Retirement

Stephanie Booth

|

August 3, 2023

Trustworthy is an intelligent digital vault that protects and optimizes your family's information so that you can save time, money, and enjoy peace of mind.

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Trustworthy protects and optimizes important family information so you can save time, money, and enjoy peace of mind

The biggest milestones in life rarely happen quickly.  Launching a career, buying a home, becoming a parent  — these momentous changes all take time. (And require lots of thoughtful decisions along the way.) Retirement is no different. It’s a significant (and exciting) change that’s best to plan for and work towards. In this Guide, we’ll walk you through what that timeline can look like. 

Key Takeaways:

  • Calculate your retirement income 

  • Envision your new retirement lifestyle

  • Plan for extenuating circumstances and learn how a professional financial planner can help

What Steps Can I Take to Prepare for Retirement?

It’s never too soon to imagine what your life will be like (financially and otherwise) once you stop working. The following steps can help you get the clearest picture:

Understand where your finances are right now. 

Add up your assets, including:

  • Your home value

  • Any other real estate 

  • Your car(s)

  • Checking and savings accounts

  • Bonds

  • Money market accounts

  • Pensions

  • Stocks 

  • Other investments

From that total, deduct everything that you owe, such as credit cards, mortgages, balances due on student loans, etc.

The result is your net worth. It’s not set in stone (especially if you’re still working full-time), but it can give you an idea of where you are now, financially. (And where you’d like to be.)

Check your Social Security. 

The Social Security Administration offers a personalized estimate of future benefits. Create an online account to see the distributions you’ll receive, based on how old you are once they start. Generally speaking, the longer you wait to claim your benefits, the more your payments are guaranteed to be.

Social Security benefits don’t include:

  • Investment earnings

  • Pensions

  • Annuities

  • Capital gains

  • Other government benefits

You’ll need to factor these sources of income separately. Be forewarned: each has its own specific quirks. For instance, returning to work after retirement can affect your pension and how much you pay for Medicare.

Take advantage of retirement accounts. 

Money trees don’t exist (yet!), but you still have plenty of options to grow your finances. When you’re preparing for retirement, some common ways to save include:

  • 401(k) 

    Many workplaces offer this type of account as an employee benefit. You’re able to directly deposit part of your paycheck, and that amount is deducted from your taxable annual income. You won’t pay taxes on it until you make a withdrawal.


    In 2023, you can contribute up to $22,500 to your 401(k). People who are 50 or older are also allowed to make catch-up contributions, which allow you to set aside even more of your earnings — in this case, an extra $7,500.

  • Traditional or Roth IRA

    Anyone can open an individual retirement account; unlike a 401(k), you don’t need an employer to sponsor you. In some cases, you can deduct contributions to a traditional IRA from your federal taxes. A Roth IRA uses after-tax dollars, which means you won’t pay taxes when you decide to withdraw funds.


    In 2023, the total amount you can contribute to all your traditional and Roth IRAs is $6,500 or your taxable income, if it’s lower. If you’re at least 50 years of age, you’re also allowed a catch-up contribution of $1,000. There’s no limit to contributions for people over 70 ½ years.


  • 403(b) and 457(b)

    These plans are often offered by government agencies and nonprofits. They operate a lot like 401(k)s, but a 457(b) lets you make a withdrawal without penalty if you leave your job.


    You can contribute $22,500 to a 403(b) in 2023. If you’re 50 or older at the end of the year, you can also make $7,500 in catch-up contributions.


    You’re allowed to contribute up to 100% of your compensation or $22,500 to a 457(b). Special catch-up contributions are also allowed, but restrictions depend on your plan and age.

  • HSA

    A Health Savings Account may not be the first (or second) plan you think about when you’re preparing for retirement, but it can be a great way to help defray expensive healthcare costs in the future. (More on that coming up.)


    Anyone with an HSA-eligible health plan can open an HSA. Like a 401(k), you’ll contribute pre-tax dollars and your employer may match them. Withdrawals that go towards qualified medical expenses, like prescriptions, won’t be taxed either. 


    You can contribute $3,850 for yourself or $7,750 for family coverage in 2023. At age 55, you’re also allowed $1,000 in catch-up contributions.

Figuring out which retirement plans are the best fit for you will depend on a number of factors, including your financial objectives and the time you have to achieve them. Here’s where talking  through your options with a financial planner could really come in handy. 

To help them understand where you are financially, you’ll need to share information about your current assets and debts. That can include:

  • Your most recent pay stubs

  • Bank statements

  • Investment accounts

  • Retirement plans 

  • Insurance policies

  • Mortgage details

  • Expected Social Security distributions

  • Loan balances (car, boat, etc.)

  • Credit card statements

  • Information about any businesses or subsidiaries you may own 

Gathering these documents doesn’t have to be time-consuming if you use Trustworthy. Our Family Operating System ® is the only online platform that can give a centralized view of your most important information. All major file types and media are supported, and we automatically arrange everything so you can easily find what you’re looking for. (We’re also the only online service for families that exceeds industry standards for security and privacy.)

Downsize Your Debt

Home mortgages, medical bills, student loans, credit card debts — even small balances on each of these accounts can add up. Before you officially retire, take steps to help downsize your debt..

For instance, you could:

  • Make a budget. 

    Take a look at where your money goes each month and consider any areas where you can save. Are you overpaying for car insurance? Can you cut back on some of those streaming services? Even small changes could financially improve your outlook over time.

  • Start saving for emergencies.

    Veterinarian bills. Car repairs. That last-minute plane ticket for a family emergency. When out-of-the-blue expenses arise, they’re rarely cheap. Try to put some money aside each month to address, or at least off-set, these types of unexpected financial burdens. That way, you won’t have to carry the balance (and pay interest) on a credit card.

  • Think about downsizing.

    If your current living costs are high, downsizing might benefit you. Moving to a smaller house, condo, or apartment can translate into lower utilities and taxes, cheaper maintenance, and fewer belongings.(Just make sure the savings will offset the actual costs of moving.)

  • Time your retirement wisely.

    Would pushing back your retirement a few years put you in a better financial position? What if you retired on time, then took a part-time job? Consider which conditions will set you up for success.

Consider Future Medical Costs

Unsurprisingly, health care costs are one of the most expensive hurdles you’ll face after retirement. According to the Fidelity Retiree Health Care Cost Estimate, an average retired 65-year-old couple needs $315,000 in savings (after taxes!) to cover health care premiums and associated costs.

Although Medicare coverage is guaranteed at age 65, like everything health care-related, it’s…. complicated. 

For instance:

  • Medicare A covers your hospital costs after a $1,600 deductible.

  • Medicare B is optional coverage for medical expenses — and costs on average, $164.90 each month.

  • Medicare Advantage plans are all-in-one plans that cover Parts A and B, and sometimes extra benefits, such as Part D (prescription drug coverage.)

  • Medigap policies are offered by private insurers to cover expenses Medicare doesn’t cover.

To make sure you can pay for the plans you choose, look into that aforementioned HSA.

How Can I Ensure My Retirement Income Will Be Enough?

It’s a bit of a guessing game, but for a quick general estimate, plug some numbers into an online retirement calculator. For instance, Nerdwallet’s algorithm assumes a 3% annual inflation rate, an annual 2% salary increase, and a 5% rate of return on investments.

While online retirement calculators aren’t foolproof, they can give you a sense of how close you are to the elusive benchmark of “enough.”

Many financial planners subscribe to what’s called the “rule of 4%.” Take your estimated monthly expenses (be as accurate as you can) and divide that number by 4. For instance, if you estimate that you’ll need $60,000 a year after you retire, your ideal retirement savings would be a cool $1.5 million.

How Will You Spend Your Retirement?

Retirement, of course, is about more than your financial health. It’s about your quality of life as well. 

To make the most of this new chapter, you might want to think about:

  • Expanding your social circle

    There’s a risk of becoming isolated after retirement. Experts recommend making regular dates with friends, joining a gym, taking classes at a local college, checking out online communities — in short, surrounding yourself with people and activities that make you happy.

  • Volunteering

    Helping others will not only keep you active, but boost your psychological well-being and offer protection from depression.

  • Getting a job

    According to AARP, more than 20 percent of people age 65 or older are back at work or looking for employment. Even a part-time job after retirement can increase your monthly income and provide a meaningful sense of purpose.

(Just keep in mind: How much you earn can impact your Social Security benefits. The Social Security Administration’s Retirement Earnings Test Calculator can help you do the math.)

Where Will You Retire?

An entire cottage industry, including quizzes, magazines, books, and online rankings, is built around where you should live after retirement. (And the “top” spots constantly fluctuate.) To find the location that’s the best fit for you, consider these four factors:

  • Cost of living: Can you comfortably afford housing costs, groceries, and gas bills in an area? Or will they be too expensive for your budget?

  • Quality of life: How well does a specific locale fit your needs, be that easy access to nature, being close to your grandchildren, or a thriving arts community?

  • Climate: The more you love a certain type of weather, the happier you’ll feel living there.

  • Taxes: Take a look at taxes from the state level to county and city rates. How much will you be saving — or paying — in a certain area? 

Once you have a short list of places, consider doing a trial run. A short vacation can give you a sense of what your post-retirement life could look like and help you make some important decisions.

What Else Can You Do to Prepare for Retirement?

Keep these two last pieces of advice in mind.

Always have a back-up plan. (Or two or three.)

Among the post-retirement challenges you may encounter are:

  • Unexpected health issues and medical bills

  • Family members who need personal or financial support

  • Change in marital status

  • Change in housing needs

  • Rising healthcare costs

  • Stock market risks

  • Inflation 

  • Business risks (like a loss of your pension plan fund)

  • Changes to Social Security and Medicare distributions

  • Longevity risk (Living longer than you — or your savings — expected!)

While it’s impossible to plan for every drawback, a professional financial planner can help you game out some contingency plans.

Get excited and inspired. 

Consider preparing for retirement the beginning of a new adventure.  What are you ready to learn? What would you like to do? (Or finally stop doing?) Keeping these aspirations in mind will make it easier for you to reach your financial goals — and inspire you to begin this next chapter.

Try Trustworthy today.

Try Trustworthy today.

Try the Family Operating System® for yourself. You (and your family) will love it.

Try the Family Operating System® for yourself. You (and your family) will love it.

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