Before I offer specific retirement advice, let me repeat a mantra that I tell all my clients: The earlier you prepare for retirement, the better off you will be. Retirement often creeps up on us and we find ourselves saying, “where did all the years ago.” Below are, in my opinion, some concrete steps you can take:
- Monitor your investments prior to retirement and avoid overspending.
- You need to account for inflation as an inevitable fact of life. When planning for retirement, it’s advisable to plan for inflation as part of your strategy.
- While this is not an easy conversation to have, you need to talk with your spouse or significant other about retirement spending. During pre-retirement, it is critical that you both need to cut out any unnecessary spending.
- Not everything about retirement planning is about money. You need to focus on your physical health. As we get older, our physical health declines, which increases health costs. If you want to avoid sudden health costs that can potentially undermine your retirement planning, make sure you take care of your health.
- Create a budget and stick with it.
- Most importantly is that you need to sit down with a qualified and experienced professional advisor who will help you become fiscally healthy.
- Watch travel expenses during retirement. Many people dream of traveling when they retire, but that only eats away at your retirement goals. It is best to do much of your travelling prior to retirement.
- If you can work longer, you will increase your chances of having a more comfortable retirement. For example, people who retire at 70 years will get a larger Social security check than those who retire at age 66. That’s extra money for life in your pocket.
Financial planning is simply a way of documenting your financial status in relation to your monetary goals and the strategy for achieving your goals. While you can create a financial plan yourself, I always urge people to sit down with an experienced and qualified financial advisor to help you pursue your goals. The reason you need an advisor in my opinion, to help you figure out the strategy that will help you pursue your goals.
People often procrastinate when it comes to creating a financial plan, which is another reason I urge people to have an experienced financial planner help you. Part of the reason we procrastinate is that financial planning requires complex decision making, which makes it easier for us to keep putting it off. The problem, of course is that the longer you wait, the more difficult it could become to realize your retirement goals.
Targeted Retirement Advice
As the name implies, targeted retirement advice is focused on your specific needs and circumstances. Let’s remember that retirement is not a single event, but an ongoing process. You should never plan for retirement on your own. For one thing, emotions often get in the way when we examine our own expenditures, money habits, savings habits, and investment habits. The key term here is habits. It is our habits that often get the best of us and we make poor choices. This is why I always urge my clients to seek out the services of an experienced financial planner. A financial planner can help you answer targeted questions that include:
- When should I retire?
- How much will I need for my retirement years?
- How much can I safely withdraw each year without depleting my investment portfolio?
- How do I provide a legacy for my loved ones?
- Will I be able to rely on Social Security benefits?
- My pension will take care of me, so why do I need to prepare?
- Should I plan for retirement on my own or get targeted retirement advice from a qualified and experienced financial planner?
One thing you need to remember about retirement is that it comes faster than you think. We all believe that we have plenty of time to plan for retirement, and yet we procrastinate. Below is a list of steps that will help you prepare for retirement.
- One rule of thumb is that the earlier you prepare for retirement, the more comfortable you will be during retirement.
- Start saving at an early age, keep saving, and stick to your goals.
- Get to know your retirement needs.
- Some experts maintain that you will need 70 to 90 percent of your preretirement income to maintain your standard of living when you stop working.
- Contribute to your employer’s retirement savings plan such as a 40(k) plan.
- Learn about your employer’s pension plan. Make sure you are covered by the plan and understand how it works.
- Learn about how your pension is being invested.
- Most importantly is that you understand the ramifications of early withdrawal from your retirement savings.
The most important thing you can do, in my opinion, to prepare for retirement is to contact an experienced and qualified financial planner to help you plan and execute a retirement strategy. For example, a financial planner can help focus your retirement goals, adjust your asset allocation, when to retire to get the most out of your Social Security, and map out your retirement needs such as basic living expenses.