Smart Summer Financial Tips for Investors Nearing Retirement

As the sun shines brighter and vacation season rolls in, summer is the perfect time to not only unwind but also re-evaluate your financial strategy. If you’re nearing retirement, the warmer months can bring clarity, motivation, and the opportunity to make smart adjustments that could enhance your retirement readiness.

Here are five timely summer financial tips to keep you on track:

1. Conduct a Mid-Year Financial Checkup

Just like your physical health, your financial health depends on regular check-ups, especially as you approach retirement. Use this mid-year point to:

• Review your investment portfolio with the right qualified professional.
• Ensure that your asset allocation aligns with retirement goals, risk tolerance, and stage of life.
• Adjust your allocation, if necessary, based on changes to your goals, market conditions, or other potential factors.

Pro Tip: Early summer can be a great time to go through this process for several reasons. One is that your advisor might be more accessible than he would be in the busier spring and fall seasons. Another is the improved peace of mind you’ll enjoy for the rest of the summer – and beyond!

2. Budget for Seasonal Spending Without Dipping Into Retirement Funds

Summer often brings increased spending due to things like vacations, home projects, and family activities. Make sure your seasonal spending doesn’t lead to early withdrawals from your retirement accounts. Consider:

• Using a separate “fun fund” or sinking fund for vacations.
• Planning low-cost activities like staycations or national park trips.
• Tracking your spending with a budgeting app or spreadsheet.

Be aware that early withdrawals from retirement accounts are not only ill-advised but can come with penalties and tax implications, so keeping that money intact is crucial.

3. Take Advantage of Catch-Up Contributions

As you may know, if you’re 50 or older, you can contribute more to your retirement accounts, and if you’re not already doing so, now is a good time to start. The rules are:

• 401(k)s: An additional $7,500 in catch-up contributions for 2025 (on top of the $23,000 limit).
• IRAs: An extra $1,000 on top of the $7,000 limit.

Make sure you’re on track to max out these contributions before year-end. Summer is a great time to adjust payroll deductions or automate additional contributions.

4. Review Your Income Strategy

If you are within ten or so years of retirement, that means you’re in the transition stage between saving for retirement and needing your accumulated savings to start generating reliable income. Now is the time to begin evaluating:

• How much monthly income your current portfolio can realistically generate.
• How much of your total investment return comes in the form of growth (capital gains) and how much comes in the form of income (interest and dividends).
• Your strategy for maximizing Social Security benefits and minimizing their tax impact.
• Whether your strategy accounts for all the contingencies unique to retirement, including inflation, healthcare costs, market risks, and longevity.

Pro Tip: The transition stage is the ideal time to begin shifting your strategic financial focus from growth to income-first, growth-second. Doing so in the years before retirement can give more strategic options for growing your portfolio “organically,” with less risk, and potentially increasing your future income.

5. Make Sure Your Current Financial Advisor is Still the Right Advisor

Even if your current advisor did a great job helping you grow your portfolio during your working years, he or she may not be the advisor best suited to serve your needs as you transition toward and into retirement. Once your top priority shifts from growth to income, in most cases, it’s best to find and work with a financial advisor who specializes in retirement income and can help you build a strategy designed to:

• Better protect your savings from the risks of volatility and spend down.
• Generate reliable income sufficient to meet your needs and goals regardless of market conditions.
• Prepare you for the challenges of inflation, healthcare costs, taxes, longevity, estate planning, and other long-term risks.
• Enjoy retirement with greater confidence and peace of mind.

Final Thought

While summer is a time to enjoy life, it’s also an ideal season to make smart financial moves. With a bit of planning and a proactive mindset, you can enjoy the sunshine today while building a more secure tomorrow.

As noted, financial advisors often get busier later in the year as clients rush to complete tasks they’ve neglected. Summer is typically quieter for many advisors, making it a great time of year to find a retirement Income Specialist in your area and schedule an initial meeting.