5 Simple Retirement Questions (That Are Hard to Answer)

Retirement planning is complicated, especially when you boil it down to an individual level, and many of these questions can become overwhelming to answer. As you think ahead to what your retirement might look like, spend some time with each of these and see if you know how you’d answer. 

Some of retirement planning’s most important questions seem so simple when you first hear them. Many times they can be asked in just a handful of words and give the impression that the answers are a simple ‘yes’ or ‘no’.

But retirement planning is complicated, especially when you boil it down to an individual level, and many of these questions can become overwhelming to answer. As you think ahead to what your retirement might look like, spend some time with each of these and see if you know how you’d answer. 

When will you take Social Security?

Many people assume that claiming Social Security as early as possible is the best decision to make because it will mean more money in retirement. That could be true, but it’s certainly not the case for everyone. Social Security is much more complicated than most people realize, and you have to weigh a number of factors to determine when you should start taking your benefit. Remember, you really only have one chance to get it right so make sure you have a clear strategy in place.

Have You designed a truly diversified portfolio?

Diversification is word that gets used a lot in financial planning. The goal of distributing your money into different investments and assets to create balance across your portfolio is not a new strategy at all. But that doesn’t mean you’re definitely doing it right. There’s under-diversification and over-diversification and we often meet with people that are on one side or the other and they don’t realize it. Make sure you work with an advisor to evaluate your holdings to determine what adjustments need to be made to create a truly diversified portfolio.

Which funds should you pick for your 401k?

Setting up a 401k is the easy part. What you do with your contributions is what will determine how well you set yourself for retirement. The problem with 401k accounts is the funds within the account aren’t always straightforward. You have to do your research to know what the holdings are within each fund, what the costs and fees will be, and how much risk you’ll be taking on. It can be overwhelming at times so work with an advisor to get help and ensure you’re getting the most out of your money.

Should you do a 401k rollover?

The strategy of rolling over old 401k accounts is growing more in more in popularity. We talk all the time with clients about whether they should consider a rollover. A lot of that has to do with taxes, which are at historic lows and could likely go up in the future. Along with that, a rollover will provide you with a wider variety of investment options and that could help you find funds that better help you reach your goals.

Have you addressed the cost of a nursing home stay?

The last question to be thinking about is whether your plan is addressing the cost of a nursing home stay. It’s not a topic people enjoy talking about. And if you’re in good health, it might not seem like a necessary short-term planning discussion. But think about what it could mean to your finances if you all of a sudden needed the care but didn’t have the funds to immediately cover it. Hopefully, it’s not an expense you’ll incur later in life, but you want to be prepared just in case.

As you can see, these things might seem simple on the surface but a deeper discussion will benefit you over the long-term.

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