Christine Benz Outlines Essential Financial Strategies for Individuals Preparing to Retire Within One Year
Christine Benz, Morningstar’s director of personal finance and retirement planning, recommends a structured approach for those entering retirement within the next 12 months. She advises retirees to first map out a spending budget for the first decade of retirement, accounting for major upcoming expenses like home repairs or travel. Benz emphasizes the importance of formulating a Social Security strategy, noting that while some may file early due to health, others may benefit from delaying to enlarge their lifetime benefits. To manage market volatility, she suggests building a "cash bucket" containing one to two years of anticipated spending to insulate the portfolio from "sequence of returns risk." Furthermore, Benz suggests a specific withdrawal sequence, starting with taxable nonretirement accounts before moving to tax-deferred assets, while holding Roth assets for later years. She also highlights the potential for Roth conversions during the low-income years immediately following retirement. By following these steps, investors can transition from the workforce with greater financial confidence.