Retirement might be years away for you, but you have this persistent nagging feeling inside. You might even be comparing your financial situation to specific friends, coworkers, or peers around you. You observe that you are the less financially prepared for your retirement than the others. You are not as relaxed about retirement; in fact, you are downright worried and ill prepared for this stage in your life. The self-deprecating thoughts in your head might be chanting, “Just like the highly educated Mr. Jones over there with a very successful career and a fantastic financial plan, I could have, I would have, I should have…” I could have chosen a better job with a higher pay. If I had foreseen tough times, I would have started saving for my retirement earlier. I should have contributed more money to my 401’k through the years.
WHAT IS THE “NEW VIEW” OF RETIREMENT?
Many of us today get all caught up in everyday living that we don’t put much priority on looking ahead into our “Golden Years” of retirement. We can no longer plan like our parents and grandparents.
- It’s important to determine the amount of money that you will need in retirement
- Create your own goals for a successful retirement
- Eliminate debt and improve cash flow
- Select the retirement plan distribution choice that is right for you
- Plan your retirement income to preserve a comfortable standard of living
- Transfer the risk of potential financial losses before or during retirement
- Reduce or eliminate taxes, expenses, delays and legal challenges with estate planning
Retirement is changing, but that doesn’t mean you can’t still build a healthy, strong retirement plan even with a moderately uncertain future. Your retirement is something that needs to be made to last a long time and you’re allowed to take your time putting the right amount of money into it. As long as you avoid the unnecessary risks in relying on social security, plan for a slightly longer nesting period for your children and plan for your own longevity, you can avoid a few of the major pitfalls that your retirement plans may otherwise succumb to.
Bolstering Savings
Most Americans are not taking full advantage of tax-favorable workplace-sponsored retirement savings plans or individual retirement accounts (IRAs). This is perhaps the easiest place to begin plugging the holes in your savings plan, so consider contributing as much as you can to your employer’s 401(k) plan. If your employer matches your contribution, try to put away as much as your company will match to; doing anything less is akin to turning down free money.
Reevaluating Retirement Age
It seems as though despite one’s age, the average age at which most Americans plan to retire is the ever-popular 65. However, as the Boomers are discovering (indeed, the Fidelity research found that many Boomers are facing a worrisome drop in income), putting off full retirement by a few years can help shore up assets to ensure you don’t suffer a decline in their income and standard of living. What’s more, Fidelity also cited that even working part time after age 65 can be a powerful way to stretch your retirement assets.
Adjusting Asset Allocation
While it’s certainly understandable that investors of all ages may be a little skittish when it comes to the stock market these days, the Fidelity Assessment found that 21 percent of survey respondents are invested
too conservatively in the equities market with what the report describes as “limited exposure to stocks, based on their current age and planned retirement date.” This underscores the importance of working with an advisor to ensure your plan is properly allocated with the right amount of exposure to the long-term earnings opportunities only stocks present.
Annuitizing Retirement Assets
Working with an advisor to explore adding an annuity to your retirement plan can ensure you have enough money to cover your expenses throughout your retirement, especially as more and more Americans can expect to live well into their 80s and even beyond.
