Are You Ready To Answer The Door?
Traveling to exotic places. Enjoying time with the grandkids. Supporting philanthropic efforts. While these all might be things you hope to do during retirement, do you have any idea the likelihood that you’ll get to do them?
Sadly, more and more individuals are finding that they’re not adequately prepared for retirement. According to the Employee Benefit Research Institute’s (EBRI’s) April 2019 Retirement Confidence Survey, only 23 percent of individuals surveyed are “very confident” that they’ll have enough income for a comfortable retirement. That’s an astounding, yet insightful number. How would you answer the question, “How confident are you that you’re prepared for retirement?” If you find yourself outside of the category mentioned above, all hope is not lost.
For some of you, retirement may seem far away. But there may be some of you who are fast approaching the time when you expect to retire. Wherever you’re at on the retirement spectrum there are practices you can put in place now to move you toward your retirement goals.
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Six Practical Tips for Retirement Readiness
- Look at your ability to save and cut corners where you can save money.
Even if your savings goal seems beyond reach or too distant in the future to be of primary concern right now, re-evaluate where you can save and strive for it. Some individuals won’t begin to save if they see the goal as unattainable thereby setting themselves up for failure before they even begin. Just as a tiny grain of sand can form into a pearl within an oyster over time, small steps in saving for retirement can lead you to your goals. Take responsibility to make it happen, and get financial advice if you need some help.
- Determine what you expect your retirement lifestyle to look like.
Don’t dream it – envision it. Dream by definition is something that eludes your grasp when you reach out to touch it. Vision implies a plan; an intention you can realize if you apply yourself in the right way. So envision how you will spend your time during your retirement. If you envision traveling to those exotic places I mentioned earlier, or perhaps you want to buy a motor home and travel the United States, you must have the funds to do it. In theory, it sounds like a great idea, but what some people realize upon retirement is that they don’t have enough funds to support the adventurous lifestyle because they failed to plan appropriately. The EBRI survey cited above also showed that 38 percent of individuals have talked with a financial advisor about their financial situation, while almost the same amount (34 percent) claimed they did not perform such engagement or research putting together a retirement plan. If you want to have a retirement that is close to what you envision, put a realistic plan together for what you expect retirement to look like and go after it to make it happen. Otherwise, you will just be chasing a dream.
- Evaluate your debt.
Have you purchased a new car? Is your mortgage paid off? Are you (or are you planning on) paying for your kids’ or grandkids’ college educations? As you prepare for retirement, you must evaluate your debt situation. Ideally, you don’t want to retire with any debt. Work hard now to pay off the debt you may have. It will pay off (literally and figuratively) later on down the road!
- Anticipate medical costs and needs.
You may feel fit as a fiddle. But unfortunately for many of us, that feeling won’t last our entire lives. As we get older, our bodies age, and we need to prepare financially for any potential medical costs or needs we could encounter. Medical costs are one of the more commonly overlooked items when planning for retirement. Knowing your family’s medical history could be helpful when anticipating your future medical costs.
- Consider what monetary resources you have to pull from.
There’s a whole slew of ways you can fund your retirement. Make certain you are taking advantage of any retirement plan your employer offers. Not only does this give you the ability to save for retirement, but many employers will also contribute money for you – do your best to take full advantage of the contribution your employer will make for you. Personal savings and other avenues, such as an Individual Retirement Account (IRA) or investment in property, could also be considered.
- Understanding Social Security options.
Social security benefits are likely to be factored in as part of your retirement benefits, but should not be viewed as the only or primary source of retirement income. Consideration of when you begin claiming Social Security benefits should not be taken lightly. Social Security benefits consist of a complex calculation and there are hundreds of claiming strategies that can be utilized. There are also many myths and misnomers regarding Social Security. It is important to have a basic understanding of this benefit and even more important that you have an analysis performed to determine what your ultimate claiming strategy is for your particular situation.
Retirement Planning Help
While these six tips won’t completely solve all of your retirement woes, they’ll help you get in better shape for retirement. Don’t wait until it’s too late. We are offering a free consultation to discuss your retirement readiness strategy. Our team is ready to help you put together a plan to ensure you’re on a path to envision your retirement. After all, you deserve more than just a dream when it comes to your retirement.
By: Darlene Finzer, CPA, CSA, QKA (New Philadelphia office)