Retirement is exciting to ponder, but it requires careful planning to ensure security and peace of mind. Whether you’re retired now or it’s on the horizon, having a well-thought-out plan makes a world of difference in how much you enjoy your time. Let’s go over six steps to build the perfect retirement plan and take control of your future.
Define Your Retirement Goals
Where do you see yourself in your golden years? Set clear and realistic goals. What should your retirement look like? Do you look forward to lots of travel or buying your dream retirement home and relaxing in it? Do you want to spend more time with your hobbies, or do you prefer lounging around by the pool with a good book? Maybe your goals include a combination of all the above. Determining your future lifestyle grants a better idea of how much you’ll need to save. Specific goals make it easier to create a map for the journey.
Assess Your Current Financial Situation
Obviously, reaching the above goal is dependent on how much money you have now. Review your savings. Look at your current sources of income, whether through employment, investments, and so forth. At the same time, review your potential living expenses—the must-haves—like healthcare, housing, food, utilities, and others. A detailed financial assessment sets the stage for the next step.
Calculate Your Retirement Needs
Now that you know your goals and financial status, calculate how much you need for the lifestyle you want. Most financial experts say you should aim to replace 70 to 80 percent of your pre-retirement income each year. Look for a retirement calculator—there are hundreds available online—or make an appointment with a financial advisor for an accurate projection of this amount. You’ll review and consider factors such as inflation, life expectancy, future expenses, and more.
Develop a Savings Plan
Now that you know what you need to fund your retirement, create or adjust your savings plan. Boost contributions to your retirement accounts or open one like a 401(k), IRA, or Roth IRA. If you’re behind on savings, catch-up contributions accelerate your progress. Talk to your advisor about diversifying your investments to protect your portfolio and maximize growth.
Address Debt
Do yourself a favor—start retirement debt-free. Pay off credit cards, car loans, and your mortgage if you can. Removing the dangling sword of debt leaves you unburdened later in life. Naturally, be realistic about what you do within a specific timeframe. But otherwise, paying off liabilities is a winning strategy.
Factor in Social Security and Other Benefits
You have some money coming to you. Social Security, for example, may account for much of your retirement income. Take benefits at an age that ensures maximum payout. Waiting until full retirement age or slightly later guarantees the highest monthly amount, so reconsider retiring too early. Look into pensions, annuities, freelance work, and other means to supplement your savings.
Those are just six steps to build the perfect retirement plan. Regularly review and adjust your plan to adapt to changing circumstances and remember to stay flexible. Create a future you’ll love living in!
“I Can Ask”
Chair Fay Christian opened the Operations Advisory Committee on February 12th, reading out member names from a prepared sheet that omitted Melissa Wade. It didn’t feel intentional, but it struck me as odd precisely because it came from something prepared. Lydia Tang gently corrected her, noting that Wade was, in fact, a member of the committee. Wade met the moment with grace, or perhaps she simply wasn’t bothered by it.
