Preparing for Retirement

A common question we receive is, am I ready to retire? We’ve put together a few guidelines for your consideration while making such an important decision.

  1. Know Your Defined Income Sources
  • For most retirees, the primary source of income is Social Security. Most folks start their benefit at age 62 while others wait until up to age 70. The payments come with an annual inflation adjustment tied to the Consumer Price Index. The amount you receive at Full Retirement Age (i.e., age 67) is a calculation based on your 35 highest earning years. For married households who had a high-earner, it is not uncommon for the lower earning spouse to receive half of the high-earners benefit. If you wait past your Full Retirement Age to draw benefits, there is an 8% automatic increase every year. By delaying your benefit until age 70, you can receive 132% of your Full Retirement Age Benefit. The right moment to start your Social Security benefit will take into consideration your portfolio assets, other recurring income sources and your health.

  • Thirty-nine percent of Baby Boomers have a pension1 More increasingly, we see employers offering a lump-sum payout to retirees in lieu of paying a monthly benefit. Taking a monthly pension or the large one-time payout is a big decision. Obtaining the advice of a fiduciary to consider your options is worthwhile2.

  • Other common income sources may include deferred compensation, rental property income, or annuity payments.
  1. Complete a Budget
  • Set a baseline of how much you need to cover your living expenses. Beyond that, consider one-time expenses (i.e., new roof or kitchen remodel) that will happen in the coming years. At Apella, we forecast our retirement planning at 100% of pre-retirement spending.
  1. Understand Supplemental Withdrawal Sources
  • Looking beyond defined income sources, your expense needs will come from savings along with your stock and bond portfolio. Depending on your account structure, which determines the tax nature of each account, a short-term, mid-term and long-term sequence of withdrawal and asset allocation strategy will align risk to future cash needs.
  1. Investment Guidance
  • Most retirees will benefit from a Total Return Strategy3 which builds an investment portfolio that provides income but also focuses on capital appreciation with annual rebalancing4. A rule of thumb for a 50% stock and 50% bond portfolio is to start with 4% of your portfolio with 30 years of withdrawal needs from your accounts. Then, you may strategically increase the withdrawal rate from your portfolio as you get older since your time horizon of needing the money is shorter5.

  • We advise working with a fiduciary to build a portfolio in retirement with ongoing monitoring to create a well-diversified portfolio to help meet your cash flow and appreciation objectives.
  1. Inflation

  • A well-thought-out financial plan will consider inflation (the cost of living going up) to show what today’s dollar may buy you in the future. A well-constructed portfolio will try and offset the anticipated rise in the cost of living while also providing current income to meet expenses.
  1. Medical Enrollment and Costs
  • Enrolling at the right time in your retirement health benefits is important. The most common structure for those age 65 or older will be a Medicare and Medicare supplement plan, but there are other options such as Medicare Advantage that may make sense for your individual situation. Working with an established healthcare broker can make sense and take the guess work out of the enrollment process.
  1. Decide Where You Will Live
  • If you plan to retire in a state with federal and state income tax, the amount of withholding will need to be considered in your financial plan.
  1. Make Your Schedule
  • After having a lot of structure during your working years, now you must build out your own schedule of activities. It can take time to find your purpose in retirement but keeping mentally and physically stimulated can create more fulfillment and better overall health. In the Seattle area, has many activities and events. And there are similar community organizations and senior centers across the USA that focus on event and wellness activities.


While this list will give you points of consideration as you prepare for retirement, it is by no means exhaustive. Engaging a fee-only fiduciary for a free consultation is a great first-step in your journey. Let us help get you started.


1 JP Morgan Asset Management 2022 Guide to Retirement

2 Consumer Financial Protection Bureau

3 Charles Schwab How to Use a Total-Return Approach for Retirement Income

4 Vanguard Tuning into the Right Frequency for Rebalancing

5 Charles Schwab Beyond the 4% Rule: How Much Can You Spend in Retirement?


Apella Capital, LLC, DBA Apella Wealth provides this communication on this site as a matter of general information. Information contained herein, including data or statistics quoted, are from sources believed to be reliable but cannot be guaranteed or warranted. Nothing on this site represents a recommendation of any particular security, strategy, or investment product. The opinions of the author are subject to change without notice. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. All content on this site is for educational purposes and should not be considered investment advice or an offer of any security for sale. Please be advised that Apella Capital does not provide tax or legal advice and nothing either stated or implied here on this site should be inferred as providing such advice. Apella does not approve or endorse any third party communications on this site and will not be liable for any such posts.

Diversification seeks to reduce volatility by spreading your investment dollars into various asset classes to add balance to your portfolio. Using this methodology, however, does not guarantee a profit or protection from loss in a declining market.


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