Winging Retirement Won’t Work

Author: AB Staff

Winging Retirement Won’t Work

Editor's Pick Finances


Planning for retirement is not easy and because of its complexity, you may be putting it off for the future. It’s a mistake many people make which can often lead to an unpleasant retirement. Of course, it’s best to plan early, but no matter your age, it’s best to plan now than to hold it off when it’s really too late. Here are some tips to help you get started on your road to a successful retirement.

Tip 1: Create a Budgeting Plan

Retirement confidence levels are at an all-time low, and this is mainly due to the fact that people aren’t planning on what they should be saving for retirement. A report from CBNC states that 81% of employees don’t know how much they need to retire. If you are feeling a general lack of retirement confidence or fall into the category of “unknowns”, it is most likely because you did not create a basic plan. You should start out by writing down a goal of what you think you will need for retirement. Then, check what you currently have in your retirement accounts, and determine how much you will have to save annually in order to reach your goal. This can be a very simple one paged plan. You also need to ensure that you track your progress and stay committed to your plan. Here are some tools to help you get started:

  1. Retirement Income Calculator from The Vanguard Group
  2. Retirement Planner from MarketWatch

Tip 2: Protect Yourself and Your Family

Although planning for retirement is essential, you also need to focus your attention on protecting yourself and your family against potential risks. The first step is to make sure that you have the proper life insurance coverage based on your needs. Review your insurance policies at least one a year, and recognize as your life changes or a major life event occurs, you may have to change your coverage as well.

The next step is to focus on your health. A long term disability or a long term stay in a nursing home can have a huge impact on your financial wealth. Ensure that you have appropriate coverage in order to reduce this financial risk, and include health care costs into your budget plan for retirement.

Finally, make sure that you also protect your assets. Developing a diversified portfolio will help reduce the risk of your retirement savings going south along with your retirement dreams. Choosing the right investment allocation based on your financial goals, age, risk tolerance, and time horizon can play a major role in helping you plan for your retirement.

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Tip 3: Explore All Your Retirement Options

Make sure to explore all of your employer-sponsored retirement plans such as 401(k) and 403(b). Many financial experts suggest creating a retirement plan through your company for multiple reasons. The first reason is because contributions are made pre-tax so they directly reduce your taxable income. Also, these contributions grow tax-deferred, so you won’t pay taxes on the gains until you withdraw the funds.

The second reason is because many employers offer a matching contribution which means that they will most likely match the exact amount that you originally invest into your retirement account. It is suggested that you invest the maximum amount of funds that your company allows so that you will receive a greater match.

Tip 4: Focus on Your Overall Financial Health

In order to increase your overall financial wellness, there are certain steps that you need to take. First, you should increase your knowledge on retirement saving options so that you are more prepared for retirement. If you are at all worried that you will not have enough income put towards your savings, then you can consider working overtime or getting a part time job in order to increase your overall income. Finally, it is essential that you create a budget or personal spending plan in order to keep track of your income and expenses, and to find ways to reduce your spending. This is a key step to achieving retirement success.

Trust the Process

Improving your overall financial well-being doesn’t happen overnight, however if you follow the steps listed above and make sure you plan ahead and stay on track of your plan, you will be on your way to retirement success. If you want to achieve your goals during retirement and have all your dreams become a reality, then you must plan in advance!

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