Colorado Springs Financial Planner offers pre-retirement planning advice

When it comes time to switch to a pre-retirement portfolio many people have no idea where to start. It doesn’t even help much to speak to your friends because no two 60-year-olds are alike! The perfect portfolio for your neighbor simply may not do a thing for you.

It’s also important to remember that there’s more to pre-retirement planning than your portfolio alone – that’s only one part of it. For example, if you don’t have adequate health insurance all it takes is one bad physical ailment to have your portfolio all but disappear within a week or so.

The first step you must take in preparing for your retirement, no matter what your current situation, is to start building up a cash reserve. Ideally you should have enough cash to see you through at least one year, preferably two, without having to touch your stocks. When I say cash, I really mean any of your safe liquid investments including treasury bills and money market mutual funds.

Remember that you will have your social security and your pension to help tide you over. If you expect $20,000 from social security and $15,000 from your pension and you need to have $50,000 a year in retirement, then you’ll  need to come up with $15,000 for your first year.

Your stocks will grow enough over time to cover you in future years but having a cash reserve will give your portfolio time to grow. If you start trying to put some of your retirement savings into cash now, that would be a great start. It will build up over time.

If you would like to discuss your pre-retirement planning in further detail, contact Colorado Springs Financial Planner Mary Brooks at Brooks Financial Planning today to discuss your options.