Five years ’til retirement ...

As a follow up to my previous column, “One year ’til retirement ...,” I wanted to outline the steps you should take if you are five years away from living your retirement dreams.

Take your retirement pulse: Similar to seeing your primary physician, it’s imperative to get regular readings on your finances as your approach retirement. The year 2021 has been an exceptional one in the equity markets. It’s a good time to add up all of your holdings and survey your allocation mix.

You likely will find that certain investments have grown above your suggested allocation and risk tolerance levels. With possible tax changes on the horizon, this may be a great time to sell some of your stock at a potentially lower capital gains rate. Consult your CPA in regards to capital gains taxes for 2021 since Congress has mentioned a retroactive higher tax for certain wage earners!

Bonds: Keep in mind to assess your bond holdings as we are currently in a tricky market environment for bonds. Bond funds should be closely monitored. As rates rise in the coming years, your fellow bond fund holders can wreak havoc on your investment if they head for the exits. When redemption requests rise, this can leave bond fund managers desperate to sell bonds at any price to create liquidity. A worst-case scenario for those left holding the fund.

Cash: We are currently in an environment with increasing inflation. With cash barely earning a positive return, you may find yourself below water when taking inflation and taxes into account. Look to conservative alternatives when possible.

Check in with HR: If you have an accessible HR department at your company, the five-year mark is a great time to order projections of any pensions you may have. You will want to ask about insurance when your leave your company and any other benefits that may be available when your big day arrives.

Update estate plans: If you’re close to retirement, it’s likely your children are out of the house or in college at this point. It’s a great time to update your wills and estate plans. Reviewing old insurance policies is a great idea, as well. If you’ve done well saving, you may not need as much coverage as you’ve had in the past. That said, some insurance policies can be tapped for long-term care benefits or used to pay estate taxes, so be careful and review these coverages with your financial planner before making rash decisions on your insurance.

The fun part: Start taking vacations in your desired retirement locations. Get a feel for the areas that you are interested in and check out some of the rentals in the communities that are appealing to you.

For podcast fans, please tune in to our fun financial podcast “unfettered wealth” from your favorite source. You can also pull up our podcasts on YouTube. Enjoy!

Eric Tashlein is a Certified Financial Planner professional, founder and financial advisor at Connecticut Capital Management Group, LLC, 2 Schooner Lane, Suite 1-12, in Milford. He can be reached at 203-877-1520 or through www.connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice. Please consult your advisor/attorney/tax advisor. Investment Advisor Representative, Connecticut Capital Management Group, LLC, a Registered Investment Advisor. Connecticut Capital Management Group, LLC and Connecticut Benefits Group, LLC are not affiliated.