4. Consider the implications of which accounts you withdraw from when. Traditional IRAs, including IRAs you may have rolled over from your company retirement plan, have mandatory distribution rules that require you to start withdrawing from these accounts at age 70½. Roth IRAs, by contrast, have no mandatory distribution rules, and in fact, get favorable treatment should you die and leave them to your heirs. While this decision requires some individualized number crunching and thought, taking money out of your traditional IRAs rather than your Roth IRAs early in retirement will generally leave you with more flexibility in your later years than vice versa (due to the smaller mandatory distributions you'll incur).
5. Reconsider your asset allocation and risk threshold. Retirement is a time to reduce risk, taking only as much as is necessary to meet your financial needs. Even if you've been an "all stocks, all the time" investor throughout your life, it's foolish to take that added risk if you can live comfortably on the interest provided from CD's or bonds. So look closely at what your specific income needs are, and throttle down your risk if you're able.
Conclusion
I've merely touched on some of the most important aspects of creating your personal financial plan: identifying your season of life and risk temperament, determining your ideal asset allocation, applying our model portfolios, and so on. But all of this information is explained in detail in our bonus reports for new readers: the SMI New Reader Guide, and Jumpstart to Successful Investing.
While these lists aren't comprehensive, they do highlight key items to address in your personal financial plan at each stage of life. Ultimately, your financial priorities and plan of attack can only be decided by one person, and that's you. But having a step-by-step financial plan can help you stay on track when the inevitable financial temptations grab your eye.
Your goals are worth sacrificing to achieve, and taking the time to establish a comprehensive plan is the first step. This year, replace your good intentions with action by creating and following a personal financial plan. When it comes time to move into the financial home you've built for yourself, you'll be glad you did.
© Sound Mind Investing
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