Ready to make 2018 the year you get your retirement planning back on track? If you feel like you’re behind on your retirement savings efforts, you’re not alone. A 2017 Gallup study found that more than half of Americans are worried that they won’t be able to afford retirement.1
It’s never too late take action and make improvements to your retirement savings efforts. A few simple changes may be all that’s necessary to get you back on track to live the retirement you’ve always imagined.
Of course, before you can take action, you need to analyze your planning and identify areas for improvement. Below are a few questions to ask yourself about your retirement and your current financial situation. The answers to these questions should provide some guidance as you develop and strengthen your retirement plan.
When will you retire?
Time is a critical factor in any retirement plan. The more time you have until retirement, the greater the window in which you can continue to save money. Also, a longer time horizon may mean you can be more aggressive with your investing strategy, which could lead to greater long-term gains.
However, if retirement is fast approaching, you may need to adopt a more conservative stance. If you suffer a downturn, you may not have time to participate in a recovery before you retire. A financial professional can help you analyze your time horizon and determine how it impacts your strategy.
What is your expected spending in retirement?
The core objective in retirement planning is to generate enough retirement income to fund your living expenses. Of course, to accomplish that goal, you need to know what your expenses will be.
You can’t predict the future, so it may be difficult to precisely calculate how much you will spend each year in retirement. However, you can probably make an educated guess. Think about your plans for retirement. How will you spend your time? What bills might you have? Will you stay in your current home, or will you downsize?
Also, don’t forget inflation. That’s the gradual increase in the cost of goods and services each year. Even modest inflation can have a big impact over time. Your cost of living will likely increase throughout your retirement, so that should be reflected in your estimated expenses.
How much income will you receive from Social Security and other sources?
You will likely have some level of income guaranteed through retirement, no matter how long you live. At a minimum, you will receive Social Security benefits. You can get an estimate of your benefit amount from the Social Security Administration. You may also have pension benefits or other income.
Add up your total estimated income. Is it enough to cover your estimated expenses? If not, you’ll have to bridge the gap by either adjusting your lifestyle or taking withdrawals from your retirement savings.
This exercise should give you a ballpark estimate on how much you’ll need to save to fund your retirement. You also may want to consider an annuity, which can help you convert some of your savings into guaranteed lifetime income. A financial professional can help you develop a strategy.
Do you have an emergency plan?
Finally, plan for emergency expenses to arise during your retirement. You could face costly home or car repairs. You may need expensive medical procedures. You might even need long-term care, which can cost thousands of dollars per month.
Consider your strategy for covering these unexpected costs. You may want to keep a stable, liquid reserve fund for emergencies. You also may want to consider long-term care insurance.
Ready to jump-start your retirement plan? Let’s talk about it. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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