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By Michael J. Briglia, CFP, ChFC

You don’t have to be a football fan to understand the concept of a “red zone.”

Any red zone, whether within 20 yards of the goal line or some other connotation, calls to mind a sense of urgency and need for precise execution to achieve a desired result. So, whether scoring a touchdown in football, a “try” in rugby, or just looking to retire within the next three to five years, your red zone play calling and execution needs to be thoughtful and crisp to achieve success.

In my experience working with clients, the transition to retirement is one of the more significant moments anyone experiences during their lifetime. How many years are needed to transition to full retirement will differ for each person, household, or small-business owner. But here are some of the more significant challenges where calling the right plays can impact a successful transition to retirement:

What’s Your Retirement Game Plan?

Everyone loves the challenge of having too much time on their hands, but studies show that, independent of income, “retirees with a purpose” achieve a higher level of happiness. Perhaps money (alone) won’t buy you happiness. What will your purpose and game plan be?

Can You Avoid (Health Care) Penalties?

The good news of the Affordable Care Act was that everyone had access to health care insurance coverage, regardless of medical condition. But if you are not yet Medicare eligible, that coverage may be costly. The average employer subsidizes health insurance for a family of four by more than $12,000 a year.¹ Can you afford to absorb this potential cost?

Do You Understand the (Social Security) Rules?

While the rules have been recently simplified, the Social Security claiming decision can still be daunting. Social Security may be your household’s only source of guaranteed income, so it will pay to get this one right.

How Will You Draw Down Your Assets Safely?

What will be your strategy to draw down your investments to provide adequate (and sustainable) retirement income while minimizing the risk of outliving your money? And what will be the most tax-efficient strategies for your household? Potentially lower investment returns and increasing longevity make this a particularly challenging issue.

Are Your Expenses Well-Planned?

Do you know what your retirement spending budget will be? Have you stress-tested the budget by putting yourself through a retirement scrimmage to assess whether you can actually live on what you are planning? There should be no guesswork in your retirement red zone.

Gimme Shelter!

Will your transition plan involve downsizing, up-sizing, or securing “age-in-place” housing to accommodate your needs throughout retirement? What will your mortgage/debt financing strategy be? Does it make sense to be debt free before you retire? Make sure you thoroughly evaluate your options.

What’s Your Pension Goal?

If you are lucky enough to have a pension, do you know what your options are? What optimization strategies or trade-offs might be involved? Should you take that lump-sum option? With pensions, it pays to plan ahead.

Do You Have a Business Hand-Off (Transition) Plan?

If you are a small-business owner, how will you extract the value of your business for your retirement income needs? Will it involve an outright sale of the business or transition to a key employee or family member? Business transition planning is one of the more complex red zone issues, and it can take many years to implement.

Can You Manage Your Play Clock?

Planning your transition to retirement will likely reveal gaps in your plan. How you use your preretirement years to catch up on your savings, downsize your current lifestyle, or acquire new skills for a second career will be critical. Time is often the most precious (and wasted) resource we have. Manage your play clock wisely.

Have You Planned for Contingencies?

Sometimes in life an unforeseen fumble occurs. How might your transition plan be affected if certain “what-ifs” happen to you? Is your retirement income protected from premature death of a spouse, a market downturn, or other unplanned event? Stress-test your plan and make sure you can adapt.

There are many potential red zone issues that need careful planning and coordination. It’s not just calling the right plays that is important, but also having an extensive playbook of strategies and techniques that you can use for different situations. Having the right resources and tools available to help you evaluate different strategies and decision options will be critical. For more complex situations, or just to enhance your transition success, consider hiring an offensive coordinator to get you over the retirement goal line.

¹ 2016 Employer Health Benefits Survey, The Kaiser Family Foundation and Health Research Educational Trust

(Please note that current regulatory policy does not allow Mike to receive endorsements of any kind.)

This blog post is provided by Mr. Briglia, an investment advisor representative of Pillar Wealth Advisors LLC (Pillar), for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. No portion of this blog post is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Certain information contained in the blog post may be derived from sources that Pillar believes to be reliable; however, Pillar does not guarantee the accuracy, suitability, completeness, relevance, or timeliness of such information and assumes no liability for any resulting damages.