Financial Awareness: The Foundation of a Secure Retirement
As retirement approaches, financial awareness becomes more than a good habit—it’s a critical strategy. For many individuals, the difference between a secure and comfortable retirement and one marked by stress comes down to one key factor—understanding their current financial situation and what lies ahead.
Nearly 7 in 10 Americans (67%) between the ages of 50 and 74 don’t have a formal retirement plan, while 4 in 5 lack retirement planning basics on how to be financially secure.
Taking Stock: Understanding Your Full Financial Picture
“The first step in financial awareness is an honest assessment,” says Scott Mass, Senior Vice President, Investments at David Lerner Associates. “This means evaluating assets (retirement accounts, real estate, investments), current and future income sources (Social Security, pensions, rental income), and liabilities or expenses. You can’t plan for the next 20 to 30 years without knowing exactly where you’re starting from. Financial awareness gives you the tools to prepare with purpose.”
Too often, individuals nearing retirement underestimate the importance of this.
Timing Matters: Social Security and Income Streams
One of the most significant retirement decisions is when to begin collecting Social Security. Claiming early may reduce lifetime benefits, while delaying past full retirement age can increase them. The optimal time depends on health, income needs, and whether you plan to continue working. Everyone is different but we all have the same basic needs. Making choices that work for you and your financial needs is key to a strong retirement.
Awareness also means understanding how these decisions impact taxes, Medicare premiums, and spousal benefits.
Navigating Required Minimum Distributions (RMDs)
RMDs begin at age 73 for many retirees (depending on birth year), and they carry tax consequences. For those with significant traditional IRA or 401(k) balances, failing to plan for RMDs can result in unexpectedly high taxable income.
Some individuals explore Roth IRA conversions before RMDs kick in, which can potentially reduce tax liability in future years. An investment counselor can help evaluate whether this strategy aligns with your overall goals and objectives.
Managing Risk without Sacrificing Growth
Approaching retirement doesn’t mean abandoning growth—it means balancing it with stability. Rebalancing portfolios, minimizing exposure to market volatility, and maintaining adequate liquidity are all part of financial awareness.
Investment choices should reflect both your risk tolerance and your withdrawal strategy. What worked in your 40s may no longer be appropriate in your 60s.
Planning for Health Care and Long-Term Costs
Healthcare expenses often rise in retirement. While Medicare helps, it doesn’t cover everything. Awareness in this area means factoring in premiums, deductibles, prescriptions, and potential long-term care needs.
Allocating a portion of retirement savings for health-related expenses—either through a dedicated fund or insurance—can provide peace of mind and protect other assets.
Estate Organization and Fraud Prevention
A secure retirement also includes safeguarding your assets—both from legal ambiguity and financial fraud. Review wills, power of attorney documents, and beneficiary designations regularly.
Unfortunately, older adults are common targets for scams. Staying informed about common tactics and designating a trusted contact for financial matters can reduce risk or falling victim to these scams.
Why Financial Awareness Is Ongoing
Awareness isn’t a one-time exercise. As tax laws, interest rates, markets, and personal circumstances evolve, your financial plan should too. Many individuals find value in periodic reviews with a trusted investment counselor to ensure they’re still on track.
“Retirement isn’t static—it’s a phase of life that can last decades,” says Mass. “Financial awareness means staying engaged, asking questions, and adapting to change with confidence.”
Ready to Take the Next Step?
Whether you’re already working with an investment counselor or just beginning to explore your retirement options, now is the right time to act. A clear understanding of your financial position today can make all the difference for tomorrow.
Reach out to a David Lerner Associates investment counselor to start planning your path toward a confident retirement.
Material contained in this article is provided for information purposes only. It is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. These materials are provided for general information and educational purposes, based on publicly available information from sources believed to be reliable. We cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual’s circumstances. Each taxpayer should seek independent advice from a tax professional based on his or her circumstances.