Retirement is a major life transition. For many women, it can also be the first time in years that the focus shifts from building a career, raising a family, caring for parents or helping others to asking a very personal question: What do I want the next chapter of my life to look like?
Here in Connecticut, we have these conversations every day. Women from Shelton and communities across Fairfield and New Haven Counties come to retirement with different careers, families, savings, goals and concerns. Whether you are just beginning retirement planning in Connecticut or getting ready to retire soon, there is no single formula that works for everyone.
The goal of retirement planning is not simply to reach a certain account balance. It is to understand how your savings, income, taxes, Social Security, healthcare needs and lifestyle can work together to support the future you want.
1. Start With the Retirement You Want
Before focusing on investment accounts and spreadsheets, think about what retirement actually means to you. Do you want to stay close to family in Connecticut? Travel more? Spend time with grandchildren? Volunteer? Work part-time? Downsize your home or eventually move somewhere new?
Your answers help determine how much income you may need and which financial decisions deserve the most attention. A retirement plan should begin with your life—not with a generic savings target.
2. Take Inventory of Your Retirement Accounts
Many women reach their 50s or 60s with retirement savings spread across several places: a current 401(k), accounts from former employers, a traditional IRA, a Roth IRA, investment accounts or a spouse’s retirement benefits.
Start by creating a clear inventory of what you own and where it is held. Review account balances, beneficiaries, investment allocations and any old workplace plans. Then look at those accounts together as one retirement picture rather than as separate buckets of money.
This is also a good time to ask whether your savings strategy still matches your expected retirement date, income needs and comfort with investment risk.
3. Don’t Look at Your IRA Without Looking at Taxes
A retirement account balance does not necessarily equal the amount you will have available to spend. Taxes can make an important difference.
Distributions from traditional IRAs are generally taxable as ordinary income, although the tax treatment can differ when an IRA contains nondeductible contributions. Under current federal rules, required minimum distributions generally begin at age 73 or 75, depending on birth year. Connecticut retirement tax planning also means understanding how state and federal tax rules may affect your income. Taxes should be considered as part of retirement income planning—not as a separate issue after retirement begins.
As you approach retirement, consider how withdrawals from IRAs and 401(k)s may interact with Social Security, pensions, investment income and other sources of income. Tax-efficient retirement strategies can involve evaluating the timing and source of withdrawals, while recognizing that the right approach depends on your circumstances. The objective is not simply to minimize taxes in one particular year. It is to understand how these choices may affect your overall financial picture over time.
Bridgelight Financial Advisors does not provide tax or legal advice. Tax decisions should be reviewed with an appropriate tax professional based on your individual circumstances.
4. Understand How a Roth IRA May Fit Into Your Plan
A Roth IRA can play a different role in retirement than a traditional IRA. Roth IRA contributions are made with after-tax dollars, and qualified distributions can generally be received tax-free. Original Roth IRA owners also generally do not have lifetime required minimum distributions under current federal rules.
Having both traditional and Roth retirement assets may provide more flexibility when deciding where retirement income should come from. Instead of relying entirely on taxable IRA or 401(k) withdrawals, different account types can give you additional choices as your income needs change.
Some retirees and pre-retirees also evaluate whether converting a portion of a traditional IRA to a Roth IRA makes sense. A Roth conversion can create taxable income in the year of the conversion, so it should not be viewed as an automatic strategy. For women exploring retirement tax planning in Connecticut, the potential benefits, current federal and state tax implications, future tax expectations, retirement timeline and broader financial plan all need to be considered.
If you are thinking about a Roth IRA or Roth conversion, coordinate the financial-planning discussion with your tax professional before making a decision.
5. Build a Retirement Income Plan—not Just a Savings Plan
Saving for retirement and creating income in retirement are two different challenges. Once the regular paycheck stops, you need to understand where your monthly income will come from.
List your expected sources of income, which may include Social Security, pensions, traditional and Roth retirement accounts, investment accounts, rental income or part-time work. Then compare those resources with your expected expenses.
This can help identify a potential retirement income gap and show how much your savings and investments may need to provide. A retirement income planning strategy can also test different retirement dates, withdrawal levels, tax assumptions and market scenarios to help you understand how resilient your plan may be.
6. Make Social Security Part of the Bigger Picture
Social Security can be an important source of retirement income, particularly for women who may spend more years in retirement. But the decision about when to claim benefits should not be made in isolation.
Review your estimated benefit at different claiming ages and consider any spousal, divorced-spouse or survivor benefits that may apply to your circumstances. Then look at Social Security alongside your IRA withdrawals, pension income, investments, taxes and expected longevity.
The question is not simply, “When can I take Social Security?” A more useful question is, “How does Social Security fit into my overall retirement income plan?”
7. Plan for Healthcare, Long-Term Care and the Unexpected
Healthcare can become a larger part of the household budget as retirement progresses. Long-term care creates another planning challenge because no one knows in advance whether care will be needed, when it may begin or how long it may last.
Include healthcare and potential long-term-care costs when testing your retirement plan. Also maintain flexibility for unexpected expenses, changes in housing, family needs or caregiving responsibilities.
For women who have spent much of their lives caring for other people, planning for their own future care can be an especially important part of retirement preparation.
8. Build a Team You Trust—and Keep Reviewing the Plan
Retirement planning does not have to be something you navigate alone. A financial advisor, tax professional, attorney and other trusted professionals can each play a role, depending on your needs.
At Bridgelight Financial Advisors, retirement planning is personal. We are a Connecticut-based financial advisory firm, and many of the people we work with are our neighbors—people approaching retirement who want to understand their options, including retirement income, tax considerations and how their plans may change over time.
Your plan should also evolve with you. A job change, retirement date, divorce, widowhood, inheritance, health issue or new family responsibility can change the assumptions behind the plan. Review it periodically and whenever life changes.
Questions Women Often Ask About Retirement Planning
How much should a woman save for retirement?
There is no universal savings number. A useful target depends on expected expenses, retirement age, Social Security and other income, healthcare needs, lifestyle and how long retirement may last. Comparing expected income with expected expenses can help identify a potential gap.
Should I consider taxes when reviewing my IRA?
Yes. Traditional IRA withdrawals are generally taxable, subject to individual circumstances and any after-tax basis in the account. Taxes can affect how much retirement income is actually available to spend. For Connecticut residents, retirement tax planning should consider applicable state as well as federal tax rules as part of the broader retirement-income plan.
What is the difference between a traditional IRA and a Roth IRA in retirement?
Traditional IRA distributions are generally taxable, while qualified Roth IRA distributions can generally be tax-free. Original Roth IRA owners also generally do not have lifetime RMDs. The right mix depends on your circumstances, and tax-related decisions should be coordinated with a qualified tax professional.
Should I convert my traditional IRA to a Roth IRA before retirement?
A Roth conversion may be worth evaluating, but it is not appropriate for everyone. Converting traditional IRA assets generally creates taxable income in the year of conversion. Your current and expected future tax situation, retirement timeline, income needs and other financial considerations should be evaluated before making a decision.
When should I take Social Security?
The appropriate claiming age depends on factors such as your other income, retirement date, expected longevity and any spousal or survivor benefits. Social Security should be evaluated as part of your overall retirement income strategy rather than as a stand-alone decision.
How should I plan for long-term care costs?
Because the timing, duration and cost of care are uncertain, long-term care is often best treated as a planning risk rather than a predictable monthly expense. Testing different care scenarios can help show how future needs might affect your retirement assets.
A Hometown Approach to Retirement Planning
Retirement can feel complicated because so many decisions come together at once. But you do not need to have every answer before you begin. Start by understanding where you are today, what you want your retirement to look like and which decisions may have the greatest impact on your future.
For women throughout Connecticut, including Shelton, Fairfield County and New Haven County, Bridgelight Financial Advisors can help bring the pieces together—from retirement income planning and investments to Social Security, retirement tax considerations, healthcare and long-term care.
The goal is a retirement strategy built around your life, your priorities and the future you want.
About Bill
Bill Leavitt is the president of Bridgelight Financial Advisors, an independent, privately owned fiduciary financial advisory and financial planning firm. He specializes in working with pre-retirees, retirees, professionals, and women investors, helping them navigate a complicated and ever-changing investment landscape. With over 25 years of experience, Bill serves his clients using his own unique financial planning model, The Wealth Focus™ Process, where he helps clients develop their customized long-term wealth strategy in four comprehensive steps. A Connecticut native, Bill resides in southern Connecticut with his wife, Laura, and their three daughters. To learn more about Bill, connect with him on LinkedIn.