by Ramiro Marmolejo
We all look forward to the day when we decide to retire from our careers and enjoy the farewell party, cake and begin a new chapter in our lives. Have you planned for your retirement? It can be difficult, because trying to imagine what your retirement will look like is harder the further you are from your retirement date.
The reason for that is the human mind has difficulty visualizing beyond the near future.
There are steps you can take today that will help create a realistic path to attaining your retirement goals. And, when it comes to retirement planning, procrastination is not your friend.
According to a Federal Reserve Survey of Household Economics and Decision-Making, published in 2014, 38 percent of almost 6,000 respondents said that they either have no intention of retiring, or they plan to keep working as long as possible. Amazingly, 31 percent of non-retirees reported that they have no retirement savings or pension, including nearly a quarter of those over age 45. “Even among individuals who are saving, fewer than half of adults with self-directed retirement savings are either mostly confident or very confident in their ability to make the right investment decisions when managing their retirement savings,” the survey states.
Those statistics paint a bleak picture, but there are things you can do. Here are several steps you can take to improve your odds of living the retirement lifestyle you look forward to.
Start with Your Goals
For a comfortable retirement, you must be able to pay your basic living expenses without worrying about running out of money. To have a truly fulfilling retirement lifestyle, you also need money to buy the “things” or do the “activities” that go beyond your basic needs—that’s what makes retirement worthwhile. When it comes to goal-setting, there are three general categories: 1) Needs, 2) Wants and 3) Wishes. Needs are the things you must have. Wants are what you would like to have, and wishes are what you dream about.
Identify the Resources to Fund Your Goals
- Income Sources
- Investment Assets
- Other Assets
Determine Your Risk/ Return Comfort Level
Keep in mind that assuming more risk does not ensure higher rates of return. Don’t base your investment decisions on past performance. Also, learn about the potential ups and downs of the savings vehicles you are considering, and decide whether you are comfortable with those ups and downs.
Create Your Personal Retirement Plan
You will find an abundance of retirement calculators on the internet. They are easy to use and will give you a fair idea of where you stand.
Review and Discuss Your Plan Results
Include those who will share in your retirement. As you look at your resources available to fund your goals, and you look at your plan, is what you’re doing today going to get you to the retirement lifestyle you want? If not, revisit your goals and make adjustments.
Implement Your Plan— Don’t Wait!
If you discover that you can’t reach all of your goals, that’s OK. What’s important is starting today so that you have the best chance of hitting all of your attainable goals.
While there are many good online tools that can help you create a plan for your retirement, many people benefit from working with a professional. A qualified financial advisor will guide you in creating a retirement plan by helping you with decisions and strategies. There are many places your money can go, and a professional can help you navigate through the difficult decisions. How much of your paycheck should go into your 401(k)? Should you pay of debt instead of putting that money into your retirement savings? What should be the higher priority, funding your child’s education or your retirement savings? These and many other questions can be worked through and considered one at a time.
The great benefit of creating a retirement plan comes from the opportunity to review it periodically. It’s not something done once and put up on a shelf. As the years pass and your life progresses, reviewing your retirement plan helps put current events in the proper perspective. Making appropriate changes helps ensure that you reach your goals and enjoy your well-earned retirement, whatever that may look like for you.
Ramiro Marmolejo is a Certified Financial Planner (CFP) and Chartered Financial Consultant. He has been in the financial services industry for 20 years serving individuals and business owners. For more information about Marmolejo, visit www.wealthwatchadvisors.com or call 210-249-5360.