Nearing Retirement?

A neighbor might ask about your dreams, a Good Neighbor helps make your dreams a reality.


Thought Starters

  • When can I retire?
  • How much will I need to retire?
  • Am I saving enough?
  • How do I choose the right investments for me?

Decide When You Can Retire

What Do You Plan on Doing in Retirement?

  • Will you stay in your current home or relocate?
  • Are you planning to work part time, consult, or start a second career?
  • What hobbies or interests are you planning to pursue?

Determine Your Expenses in Retirement

  • Retiring in less than five years? Use 70 to 80 percent of your current income to calculate the money you’ll need for retirement.  It’s not necessary to use 100 percent of your current income because some expenses should be lower or eliminated in retirement like:
    • Housing (if your mortgage is paid off before you retire)
    • Working costs (work clothes, membership dues, going out to lunch, etc.)
    • Retirement saving
    • Retiring in six or more years?  Use 100 percent of your current income in calculating the money you’ll need to retire because you’re probably uncertain about the kind of retirement you will want.

Are You on Track?

  • See if you are staying on track and go to Calculate My Retirement. Don’t like the results? Making small changes can make a big impact for tomorrow. Here are some suggestions:
    • Boost Your Overall Retirement Savings
      • Increase your savings as much as you can every year until you reach your annual retirement contribution goal.
      • Contribute enough to your employer-sponsored plan to receive the full match.
      • Contribute up to the maximum to a Roth IRA if you qualify.
      • Add any additional contributions to your company plan.
      • If you are 50 or older, use the “catch-up” contributions available to you.
    • Tighten Your Budget to Invest the Savings
      • Revisit your budget. Use our budget calculator to determine your spending habits.  To help increase your savings:
        • Establish a “fun” money account and use those funds for what ever you desire.  When the money runs out, no more spending on discretionary items until the next time you add money.
        • Consolidate your credit cards and pay them off as quickly as possible.
        • Refinance your mortgage.
        • Forego certain activities, such as travel or large expenditures.
    • Adjust Your Retirement Timeline
      • Consider retiring later to give yourself more time to save.
      • Many retirees supplement their income with a part-time job or becoming self-employed.

    Reevaluate your Investment Mix

    As you approach retirement, it may be a good time to:

    • Conduct an Asset Allocation Analysis.  Your State Farm agent can provide you with a Client Portfolio Report to:
      • Compare how your assets are invested in stocks, bonds, and cash with a model portfolio based on your risk tolerance.
    • Consider the Risk of Your Portfolios.
      • You may want to seek a combination of investments that are more conservative because you have a shorter time frame to compensate for the inevitable fluctuations of the market.
      • Consider putting part of your retirement savings into an annuity that may enable you to receive a guaranteed income for your lifetime. State Farm offers various annuity products. Talk to your agent to determine if they are right for you. Guarantees based on the claims paying ability of the issuing life insurance company.
    It is important to note that there is market risk involved when investing in mutual funds, including possible loss of principal.


    Simplify your Life

    Do you have retirement accounts from previous employers? Consider rolling over the assets from your old 401(k)s and other employer-sponsored plans to a traditional IRA.  Current laws also allow a direct or indirect rollover conversion to a Roth IRA.

    A direct rollover to a traditional IRA means you can:

    • Avoid paying federal income taxes and 10% federal penalty tax.
    • Continue to grow your tax-deferred savings.

    A direct rollover conversion to a Roth IRA means you can:

    • Pay federal income taxes on today’s value of the plan benefits without paying the 10% penalty tax.
    • Enjoy tax-free distributions when making qualified distributions from the Roth IRA.

    Learn more about rollovers, transfers, and conversions.

    To begin a direct rollover, contact your State Farm Agent for guidance and assistance.

    Other Things to Consider

    Protect Against the Unexpected

    • Concerned about the high cost of medical services and long-term care arrangements? Long-term care insurance can be the answer.
    • Will your current health coverage continue through retirement? If not, learn more about how individual health insurance can help protect your assets.
    • How can you protect yourself against outliving your income?  Learn more about annuities and how they can help you achieve your goals.

    Establish your Legacy

    Rest easier knowing your loved ones will be provided for when you’re no longer here to help.

    A State Farm agent will be glad to help you create a personal retirement plan that works best for you.  Find a State Farm agent in your area.

    State Farm VP Management Corp Risk/Important Disclosures. State Farm Mutual Funds Prospectus. The State Farm College Savings Plan Enrollment Handbook (PDF 525 KB) .

    AP2009/12/3612


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