Retirement Planning Considerations to Begin in 2023

The new year is the perfect time to set your retirement planning goals. If you are nearing retirement or just entered it, there are a lot of considerations going into 2023 that you need to inform yourself about.

10 Retirement Planning Considerations to Start 2023 Off Right

1. Review Your Financial Goals

Your financial goals may change from year to year, or they may stay the same. In either case, it never hurts to review your financial goals and touch base with your financial advisor. In our practice, we like to meet with our clients in the first part of the year to discuss their finances.

A few things to consider here are:

  • How did everything go with your cash flow?
  • Do you need to make any cash flow adjustments?
  • Do you have any big projects to reconsider this year, such as a major vacation or kitchen remodel? Major items can include a new car or any major expense that you foresee this coming year.
  • Are you entering retirement this year and losing some income?
  • Are you starting to transition into consulting or entering a higher-paying position?

It’s important to go over all of these points with your advisor as soon as possible to ensure that changes are reflected in your retirement plan.

2. Assess Your Current Financial Situation

What is your current financial situation? This includes your:

  • IRA
  • 401(k)
  • Cash in the bank
  • House
  • Investments

You need to be aware of what these accounts are and what your overall net worth is at the start of the year. Additionally, you’ll need to tally up all of your debts and financial obligations that you may have.

If you assess your current situation, you can then plan for the future.

3. Tweak Your Spending Plan

Everyone should have a spending plan in place. You’ll need to tweak this plan at the start of the year, but to tweak it properly, you need to know what you’re paying each month. Many tools can help you track your spending, such as Mint.

You can even determine your expenditures by assigning a credit card to yourself and your spouse.

At the end of the month, you can tally up the cards and anything you can’t charge, such as a mortgage payment, to have a better overall idea of how much you’re spending each month.

Some clients will go as far as itemizing their expenses so that they know exactly where their money is going each month. If you can confidently meet these expenses without worry, you may not need to go to this length of expense categorization.

4. Review Your Insurance Coverage

Everyone seems to set and forget their insurance. However, every year or two is a good time to sit down and review your insurance. You should look at your:

  • Auto insurance
  • Homeowner’s insurance
  • Life insurance
  • Liability insurance
  • Long-term care insurance

You just want to be sure that you’re getting as much as you can for your premiums. Make sure to ensure that you have enough coverage for your auto, car and other items. If the insurance is no longer meeting your needs, you may need to change insurers or plans.

5. Consider Retirement Savings

Retirement savings is also good to review, even if you’re retired and not actively saving right now. Anyone who has any sort of retirement income can start to save more for their retirement.

You can be retired and still contribute to a 401(K) or IRA.

Anyone close to retirement may want to consider the “catch-up” contributions that they can make to their retirement accounts. For example, if you’re 50 or over, you can put more into your plans in 2023.

You might also want to investigate your retirement savings to convert from a traditional 401(k) or IRA into a Roth account for tax-free growth.

6. Create a Debt Repayment Plan

Debt is an expense, and it’s something that can cost you a lot of money over time. You may have credit card debt with 15% interest that costs you money every month or a car payment.

How do you plan to get out of this debt?

Many people want to retire without:

  • Credit card payments
  • Car payments
  • Mortgage payments

Develop a plan, tweak your budget, and start paying off your debt. The general rule of thumb is to pay off debts with the highest interest first, such as your high-interest rate credit cards. You may even want to consolidate debt to lower interest rates.

7. Review Your Investment Portfolio 

Reassessing your view of portfolio risk is something you need to consider often. We do this automatically for our clients because it allows us to safeguard their investments. For example, in 2022, we saw that the bond market wasn’t performing well and started seeking bond alternatives.

You need to review your portfolio for these types of discrepancies.

Annual investment portfolio reviews are necessary because risk exposure is different for everyone. You may be fine losing 25% of your retirement, but many people will want to have a much lower risk. 

8. Review Your Estate Plan

It’s easy to get caught up in the hustle and bustle of life. When everything is going well and you’re focused on meeting your retirement goals, it’s all too easy to forget about your estate plan.

However, you should have a:

  • Will/trust
  • Living will
  • Power of attorney

You should have these documents in 2023 because they will make it much easier for your family when you pass on or if you’re incapacitated.

9. Review Your Credit Report

Even if you don’t own a credit card or use one any longer, it’s important to do a quick review of your credit report. A lot of people are shocked to find that they’re victims of identity theft and fraud.

A quick credit check will allow you to find discrepancies in your report and take action to rectify them.

10. Take Advantage of Tax Saving Opportunities

Can you be more efficient with your taxes? If you take a proactive approach to your taxes, you’ll have a lower tax bill at the end of the year. You can take advantage of:

  • Charitable contributions
  • Retirement plans

Working with a tax planner can help you devise a solid tax plan going into 2023. If you wait too long to focus on tax planning, it will be too late to put some of the methods of tax savings in place.

If you want to secure your retirement or have questions about things that you should be doing in 2023, feel free to schedule a free call with us today.