If you are a Baby Boomer – born between 1946 and 1964 – you are either retired or preparing for retirement. Whichever is the case, the new year presents a great opportunity to give yourself a quick financial check-up.
Here are three questions to consider in doing that.
Do Your Files Need Cleaning?
Determining what to keep and what to toss is not always easy. But once you figure out what you absolutely have to hold onto and what you can get rid of, it’s refreshing to put those old files through the shredder. (And think of all the extra room you’ll create in your filing cabinet!)
Here’s what you should keep:
- Tax returns for the last three years;
- Financial statements from your custodian, either electronic or in hard copy;
- Annual statements for your pension (if you are lucky enough to have one);
- Annual Social Security statements (if you are over 60 and still get these in the mail);
- Copies of your insurance policies — disability, long-term care, life, auto, and home.
If your files are stuffed with 1994 Pepco bills, credit card statements from 2000, copies of a life insurance policy you cancelled in 2007, or the last ten years of your pay stubs, toss them. And if you’re not sure whether or not you should keep something, ask your Wealth Manager.
Are Your Estate Planning Documents Accessible?
Do the family and friends named in your Wills and/or Trusts know where to find those documents should you pass away unexpectedly? (If you don’t have estate planning documents, or if they’re out-of-date, you should bring that up with your Wealth Manager immediately.) Label all of your files clearly to make it easier for those who will go through them when you are no longer here.
And what about a list of all of your passwords? I’ve started keeping mine on an Excel spreadsheet called “Passwords” (very creative, I know). You should also have a list of the people who need to be contacted should you pass away: your attorney, CPA, loved ones, financial advisor, insurance agent, doctor, bank, and wherever you keep your safety deposit box.
Do You Know What You Own?
As you begin your retirement or prepare for it, you absolutely need to know:
- What you own – in other words, a list of assets that will provide you with income during your retirement;
- What you’ll get through Social Security, part-time retirement work, and any pensions you might have;
- What you want to spend, and how much you’ll be able to spend;
- How much you’re saving (in retirement plans and after-tax savings) and how much more you need to save.
Without answering these questions, you cannot be truly prepared for retirement. As I often tell my clients, we all have choices to make, and nobody (aside from Bill Gates and Warren Buffett) has unlimited income. If you are within five years of retirement, it’s time to update those projections and revisit your progress. Now is the time to make sure you’re prepared for the day when you no longer have to set your morning alarm.