Date: July 12, 2021

Can I Retire? Financial Advisor Asks 5 Questions to Find Out

Planning for retirement can be complicated in “normal” circumstances. The Coronavirus pandemic has only amplified these challenges for many pre-retirees.

As life starts to return to pre-pandemic times, many people are asking, “Can I retire?”

As financial advisors in Gilbert, AZ, the team at Watts Gwilliam and Company have been asked this question a lot. People want to know as they approach retirement, am I still on track to retire.

While we recommend reviewing your plans with a financial advisor to address how 2020 has specifically affected your personal plans, answering the following 5 questions can help determine how much progress you’ve made so far – and how much planning is still left to do.

If you’re further away than you had hoped, we also want to share a few tips on how to catch up.

Question 1: What Will You Do in Retirement?

Have you taken some time to think about your ideal retirement life? How do you plan on spending your time? What does your day-to-day life look like?

Answering these questions will help shed some light on how much money you can expect to spend each month. Of course, there are obvious expenditures you’ll have to plan for – things like healthcare and taxes – but what hobbies or activities do you plan on enjoying?

For many retirees, plans include traveling or starting a business. For others, it involves remodeling their home or “simply” maintaining their current lifestyle while no longer working – plans that aren’t actually always that simple, especially for high net worth individuals, such as professional athletes or high-income-earning business owners.

Whatever your specific plans are, write them down so you can include them in your retirement budget.

Question 2: Where Will You Live?

Once you retire, will you stay in your current home? Do you plan to downsize? Will you move to a state with a lower cost of living? Housing is often a retiree’s largest monthly expense in retirement. Where you choose to put down roots will greatly influence how much money you need each month.

When considering an area’s cost of living, don’t forget to consider factors like:

  • Taxes (particularly income, sales and property tax)
  • Access to quality healthcare
  • Proximity to activities you plan on enjoying in retirement

Just because an area has a low cost of living doesn’t mean you won’t pay more in taxes or healthcare when you get there. Do your research and make sure you’re able to lead the type of lifestyle you envision for yourself. A financial advisor can help you with this.

Question 3: How Much Will You Have?

Do you know how much money you’ll have at retirement if you keep saving at the rate you are now? An online search will uncover several retirement calculators that allow you to enter your specifics to help you figure out your expected retirement savings. But remember, online calculators use generalizations that may not be appropriate for you. For accurate projections, work with a financial advisor to determine if you really are in fact on track to retirement or need to catch up.

Question 4: How Much Will You Need?

This question plays into the last. Once you figure out how much money you’ll have based on your current savings rate, the next question you need to answer is, will that be enough?

For example, if you find you’ll only have $600,000 at retirement but you need at least $750,000 to live comfortably, then you have a baseline to work toward. Reviewing your plans early allows you to set a benchmark – you know you need to save at least $150,000 more to reach your goal.

Again, remember to factor in what you plan to do in retirement. Painting a picture of your day-to-day life will help you figure out how much money you need to fund it.

Question 5: How Has the Pandemic Affected Your Plans? 

According to a SimplyWise survey, around 32 percent of people in their 50s and 21 percent of people in their 60s are now delaying retirement due to the Coronavirus pandemic. Only 63 percent of workers in their 50s and 60s are making the same income as they were pre-pandemic, and 20 percent of these people are doing the same work for less pay.

The financial squeeze brought on by the Coronavirus pandemic may be causing you to postpone retirement or make cuts to your potential lifestyle. In times like these, know that you don’t have to go at it alone. The financial advisors at Watts Gwilliam and Company can help you work through these obstacles to determine what you can do to catch up.


Schedule a no-obligation conversation with the team at Watts Gwilliam and Company.


4 Steps to Take Now to Get On Track for Retirement 

If you’re feeling behind on your retirement savings, don’t panic.

As financial advisors in Gilbert, AZ, the Watts Gwilliam team recommends the following 4 tips to help you get back on track.

1. Talk to a Financial Advisor

Don’t underestimate the peace of mind and clarity you can get from a second opinion from a financial advisor. Financial advisors who are highly specialized in retirement planning can help you stress-test your portfolio, calculate how much you need to afford your ideal retirement lifestyle and uncover strategies you may not have discovered on your own.

A quick conversation can have a big impact.

2. Address Over Concentrated Stock Holdings

Owning too much stock in one company exposes you to significant risks – risks that could jeopardize your entire retirement if you don’t mitigate them properly. If you have concentrated stock holdings, whether through stock options at your work or an inheritance, there are several strategies you can use to lessen your exposure:

  • Sell the stock (or a portion of it) outright
  • Use a trust to potentially reduce state taxes
  • Exchange funds
  • Consider a Stock Protection Plan (SPP)
  • Gift the stock to charity or family

For more options, read our recent blog post: How to Turn Concentrated Stock Holdings into Income Generators.

Choosing the right strategy for your situation can be tricky! Work with a financial advisor to avoid any costly mistakes. You don’t want to get this far just to take a step backward!

3. Maximize Your Contributions

Some retirement plans offer catch-up contributions for participants age 50 and older.

For 2021, you can contribute up to $19,500 to your 401(k), or $26,000 if you’re 50 or older. Employer matches don’t count toward these limits, so you can save the full amount and enjoy any “free money” your employer throws on top.

You may also want to open a Traditional or Roth IRA to help boost your retirement savings. A Traditional IRA can help lower your tax bill now, pushing the tax burden to later, when you may be in a lower tax bracket, as you’ll pay taxes on withdrawals in retirement. With a Roth IRA, you pay taxes now but enjoy tax-free growth and withdrawals in retirement. Regardless of which plan you choose, you can contribute up to $6,000 in 2021, or $7,000 if you’re 50 or older.

4. Use a Combination of Strategies

Depending on where you are in your retirement planning journey, you may have the greatest success “catching up” for retirement if you use a combination of strategies. For example, you may want to take advantage of catch-up contributions, downsize your house, pay down debt so you have more wiggle room in your budget and diversify your investment holdings.

To discuss your situation in more detail, contact us today! Our financial advisors in Gilbert, AZ are here to help!

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David Watts

Dave is one of the firm’s founders. He helps business owners, professional athletes, and other high-net worth clients develop and implement financial plans and strategies. He also specializes in helping those with single-stock positions to diversify and manage their financial lives. Other areas of specialty are wealth transfer plans for concentrated stockholders and business owners; tax minimization strategies for those with employee stock options; cash flow management; and risk management planning.