Preparing for Retirement Part One: Finances

15 Mar

Preparing for Retirement Part One: Finances

While you also need to consider emotional, physical and organizational aspects of retirement, the one most people worry about has to do with money. Let’s take a look at ways you can prepare financially for this big event in your life.


How much money you will have to live on? Make a list of potential income sources, starting with these:

  • Company pension
  • Individual Retirement Account
  • 401(k) or other workplace retirement savings plan
  • Social Security
  • Real estate
  • Self-employment or a job
  • Inheritance
  • Be creative – what other sources of income are possible?

If you expect to receive a pension, ask the plan administrator for an estimate of the monthly amount. Gather the most recent statements from your 401(k) or IRA. Visit to get an estimate of your Social Security income at retirement.

Then, think about your other assets. Do you own rental properties that you plan to either continue renting or to sell upon retirement? Are you going to downsize your home or pay off your mortgage? Will you continue working, full- or part-time? Do you expect an inheritance? Each of these may increase your retirement income.

Some of your resources, like your pension or income from work, are stated in terms of monthly income. Others, like your 401(k) balance or proceeds from selling property, are (or will be) in the form of a lump sum of cash. Seeking advice from a wealth management expert like your Deschutes Investment Consulting advisor can help you estimate a monthly income that includes both. You may also want to seek the advice of a CPA who can help you determine any potential tax liabilities.


Retirement does not necessarily mean age 65. You may be counting the days until early retirement, or you may not see any reason to retire at all, as long as you’re healthy and productive. This is especially important when you’re thinking about Social Security. The Social Security Administration defines full retirement age differently depending upon your year of birth. Those born during or after 1960 can take their full retirement benefit at age 67. For people born between 1937 and 1960, full retirement age for Social Security ranges between 65 and 67.[1]

If you decide to claim Social Security benefits before you reach full retirement age, your lifetime benefit will be reduced for each year the benefits begin early. Conversely, if you delay your benefits past your full retirement age, your lifetime benefits will increase for each year you delay, up to age 70.

Timing can make a big difference in your income. Consider the impact of an early or late retirement on a full retirement Social Security benefit of $1,500 per month beginning at age 67. Taken at the earliest possible age (62) it would be reduced by 30% for life, resulting in a monthly income of $1,050. On the other hand, delaying retirement until age 70 would mean an increase of 8% for each year, or 24%. The delayed monthly benefit income would be $1,860, a difference of $810 per month – for life.[2]

There are many choices to make and factors to consider about retirement. We will cover some of them in future issues. In the meantime, we are here to help. Contact us at 503-548-2112, or online at

[2] These figures are estimates and should not be relied upon for any specific individual. See for more information.