It’s Never Too Early to Begin Planning Your Dream Retirement
Ideally, retirement planning is a process that spans across the many decades of your working life. The earlier you begin saving and planning for your retirement, the more time you have to prepare, giving you a better chance at achieving the retirement that you dream about. No matter where you are on your retirement planning journey, there are steps that you can take to bring you closer to your goals. Use the retirement planning tips below to prepare for retirement, no matter your age, so that you can feel confident in achieving the future you desire.
Retirement Planning Tips if You’re Under 50
Here’s where to start if you still have quite a few working years left:
Think of the Bigger Picture
It’s hard to plan for retirement properly if you don’t have a clear idea of what you want your retirement to look like. Do you want to start a new business? Take off and travel the world? Perhaps you want to focus your time and energy on helping out with your grandkids. Whatever picture you envision when you think about your future, that’s what will help guide you as you begin planning and saving for your retirement. Even if you think that your plans may change down the road, getting into the habit of taking a big-picture view can give you the momentum you need to take action.
Save Early, Save Often
As soon as you have an ideal retirement in mind, you can begin mapping out exactly how much you need to save to make that dream a reality. You can figure this out by talking with a financial advisor you trust or utilizing one of the many online resources available to help people plan for retirement.
Once you have an amount determined that you need to save, you can figure out how much you need to be putting away each month to meet the desired amount by the time you retire. Be sure to save as much as possible – as often as possible – to help you reach your savings goal. Don’t forget that you can use tax-advantaged savings accounts, like IRAs, HSAs, and 401(k)s to not only help you build your savings but also gain some valuable benefits while you’re at it.
Retirement Planning Tips if You’re Between the Ages of 50-64
While earlier planning can be valuable, there are still many helpful steps you can take if you’re closer to retirement age:
Cultivate an Income Strategy
As you get closer to retirement, now is the time to begin thinking about the logistics of how you plan to support yourself financially once your traditional paychecks stop. You’ll want to think about how your assets will work together to provide a reliable income stream. Consider your Social Security benefits, the Required Minimum Distribution (RMD) amounts from your retirement savings accounts, any pensions you might be set to receive, and any investments income. It can be quite complicated to plan out how all the pieces of your planning will fit together to create the larger framework for your retirement so it may help to sit down with a financial advisor you trust to put an income strategy in place.
Switch Up Your Investment Strategy
The investment strategy you employ when you’re in your 30s and 40s may not be the right strategy to maintain as you begin to reach retirement age. Young investors have a lot more freedom to take risks because they have plenty of time in front of them to make up for any losses they may face with their investments. However, as you near retirement, you’ll want to look closely at your level of risk and determine what makes sense for this phase of your life. In many ways, now is the time to change your priority from growing your wealth to preserving your wealth. So. you’ll want to look at your portfolio and make any adjustments needed to ensure that you’re mitigating any unnecessary risk.
Make a Plan for Your Long-Term Care
According to the Department of Health and Human Services, 70% of Americans 65 and older will need long-term care at some point. While this may or may not be a surprising statistic to you, the fact of the matter is that long-term care is incredibly expensive – and the cost is only going up. Take this time before retirement to get a plan in place as to how you’ll pay for long-term care, should you need it. You may want to look into purchasing long-term care insurance that will foot the bill – just remember, it’s generally better to lock in premiums when you’re younger, so you’ll want to do this sooner rather than later.
Retirement Planning Tips if You’re 65 or Older
If you’re on the verge of retirement and still don’t feel financially ready, here are the steps you can take:
Create a Spending Plan
Too often, financial planning articles on retirement and finances focus too heavily on how to save for retirement rather than how to spend once you’re in retirement. While saving is an incredibly important aspect of retirement planning, how you manage your money once you leave the workforce is equally as important. Typically, retirees fall into one of two camps when it comes to spending in retirement: they either spend too much and find themselves at risk of running out of money, or they don’t spend enough and find themselves sacrificing things they don’t need to out of fear they’ll run out of money. The goal is to strike a happy medium where you’re able to enjoy the fruits of your labor without putting your finances at risk.
Get Tax Savvy
One of the biggest threats to retirees’ financial stability is unexpected taxes in retirement. As you begin to withdraw from your various taxable and tax-deferred accounts, you’ll want to be aware of how that money will be taxed and what you’ll owe each year. It’s typically best to tap into your taxable savings accounts before dipping into your tax-advantaged accounts, especially as the potential for higher taxes looms on the horizon. Due to the ever-changing and complicated nature of tax law, it may be smart to speak with a professional about the best strategy for your situation.
Concluding Thoughts on Retirement Planning Tips for Any Age
No matter where you are on your retirement planning journey, there are steps that you can take to help bring you closer to that dream retirement you’re imagining. It can be overwhelming to think about saving enough and managing all the moving parts that go into retirement planning, which is why beginning sooner rather than later can be advantageous. Try to take your planning one step at a time as you grow in your career and approach retirement age. Breaking retirement planning off into chunks can help alleviate any stress or anxiety you may have and make it a more approachable process to work through.
At Andersen Wealth Management, we work hard to help our clients feel financially empowered at all stages of life so they can enter retirement confidently. Contact us today to begin a conversation with one of our financial advisors about your retirement plans to see if we’re the right fit for you.