May 24, 2024  |  4 MIN READ

Approaching Retirement

After decades of hard work, you’re about to get your reward—the chance to do what you want, without worrying about where your next paycheck is coming from.

Confronting the challenges

But will your retirement really be free of money worries? That’s probably too much to expect. Still, you may be able to make things a little less stressful by taking a hard look at your finances before you quit the work force—and carefully considering some of the risks you will face in retirement.

The big retirement risk is brutally simple: You don’t want to outlive your money. If you are fortunate enough to have a pension plan in addition to your savings and Social Security, that risk may be relatively small. But if you don’t have a decent-size pension, generating a healthy stream of lifetime income can be a tricky undertaking.

Want to make sure you’re better prepared for retirement?

Here are some steps to take before your last day on the job.

  • Create a realistic budget. Take a close look at your spending. Start with the essentials: food, clothing, utilities, insurance premiums, medical and prescription expenses, and any debt payments, including your mortgage, car loans and credit card debt. Then look at other expenses: restaurant meals, movies and travel. This will give you a good idea of your spending—and how much room you have for belt-tightening.
  • Consider paying off your mortgage. If it’s doable, paying off your mortgage will reduce your monthly expenses and make retirement more affordable. If you won’t have your mortgage paid off by the time you retire, you may wish to explore refinancing while you are still employed, which might reduce your monthly expenses, or you may wish to explore a home equity line of credit. Just keep in mind factors such as your timeframes and installment payments.
  • Know your income. As a rule of thumb, you probably shouldn’t be making annual portfolio withdrawals equal to more than 4% or 5% of your nest egg’s value, and that includes any dividends and interest you receive. Not enough for a comfortable retirement? You might stay in the work force a little longer or cut back your spending plans.
  • Adjust your portfolio. You may also be able to boost retirement income by making some investment tweaks. For instance, you might be in a lower tax bracket after retirement, and that may mean you may get more after-tax income from taxable bonds rather than tax-free municipals. To get a better handle on your tax situation, you might consult with a tax advisor.
  • Consider an annuity. Another option for generating more income may be an immediate fixed annuity. With these annuities, you hand over a lump sum to an insurance company in return for a check every month for the rest of your life, the rest of two lives, or for a specified number of years. For a single life only option, the older you are when you buy the annuity and the higher the prevailing level of interest rates, the more income you’ll get. But if you die at a relatively young age, you will have received little income in return for your investment. However, there are many other options to choose from that may pay lower monthly payments but may also most likely guarantee more or all of your money be paid to you or your loved ones. Also keep in mind that your annuity income will be subject to the claims-paying ability of the issuing life insurance company.
  • Calculate Social Security. Go to and look under the menu for a link labeled “Retirement Estimator.” Click on that link, answer a few basic questions, and you will get a handle on your likely Social Security benefit. Consult a Financial Advisor for an analysis on what age it would be best to take your benefits.
  • Insure your health. If you retire before you turn age 65 and are not yet eligible for Medicare, look into health insurance to cover the intervening years. As a stopgap measure, you might ask your employer about continuing coverage under COBRA, named after the Consolidated Omnibus Budget Reconciliation Act. It’s often expensive, but it will keep you covered. Also ask your employer about whether they provide a retiree medical plan and if you are eligible. One other tip: Before you quit your job, try to get elective medical procedures and dental work done while you are still covered by your employer’s health plan.
  • Prepare for long-term care expenses. If you don’t already have a plan to meet potential long-term care expenses, now may be a good time to look into it. Traditional long-term care insurance may be one way to meet such expenses, but there are other options such as building up your Health Saving Account or purchasing a Life/Long-term care combination product. If you are married or have a partner that you share resources with, you may be concerned that, if you need care, the extra expenses will deplete your retirement resources jeopardizing their retirement lifestyle. The reverse may also be true. If you are single, you may be more concerned about being self- sufficient and able to select the level and quality of care that you desire. Long-term care costs can be substantial and not typically covered by health insurance, that’s why it’s important to talk to a Financial Advisor that can help you sort through your options.
  • Expect surprises. No matter how much you think you will spend in coming years, there’s a good chance you will end up spending more. The house may need a new roof, you might get hit with a big car repair bill, or perhaps you will have large out-of-pocket medical expenses. One implication: You should try to build a financial cushion into your retirement planning.
  • Visualize your retirement. What will you do with your retirement? How will you keep your mind and body active, and what will give a sense of purpose to your days? We spend decades preparing financially for retirement—but we often give scant thought to what we’ll do with all the free time.

Your Citi Personal Wealth Management Financial Advisor can help you think through the financial implications of retirement.

How Citi can help

A consultative and long-term approach

To help you pursue long-term goals and respond to changes in your life, a Citi Personal Wealth Management Financial Advisor will take a consultative approach in working with you, including:

  • Learning about the major life events you envision for the future, such as planning for college, weddings, major purchases or retirement.
  • Developing a financial plan and designing an appropriate investment strategy to help you pursue your goals.
  • Adjusting your approach as your own ideas for the future evolve. The goal is to help you keep your financial plan in sync with where your life is heading.

Wealth planning

For clients with more complex investment needs and strategies, such as estate planning. Our Wealth Planning Team can help develop a plan, drawing from their many years of experience and advanced education. Wealth Planning Team members include wealth planning specialists and insurance specialists.