Five ways you can help lock the pieces in place.
If you are considering taking this important step, you have nothing to fear. Here are five key pieces to put at the top of your retirement planning pile that can help you enjoy the kind of financial future you envision.
Piece No. 1: Put your plan in writing
Perhaps the most important piece is your plan. After all, when you put your plan in writing, you have a tangible record of the path ahead. From monitoring financial benchmarks to managing through market declines, a written plan is a record of commitment that will help keep you on track and grounded through highs and lows.
Piece No. 2: Protect your assets
If the thought of running out of money keeps you up at night, finding reliable sources of retirement income that suit your needs and risk tolerance can help. Many retirees are losing sleep over everyday expenses and health care. In one recent study, 87% of respondents said their No. 1 fear of retirement is having a lack of income.
Social Security, a pension, or certain types of annuities can contribute to the guaranteed income component of a well-balanced portfolio. Dependable income also can help you understand how much you can afford to spend and help you feel more at ease about spending in general. And it can help protect you against adverse consequences, such as market downturns.
Piece No. 3: Account for health factors
In a survey of more than 1,000 people ages 50-70 with investable assets of at least $200,000, just half of retirees and 36% of pre-retirees reported having a strategy on how to handle health care and long-term care expenses in retirement. There’s a good reason for having such a plan because the financial burden of these costs can be significant. It’s worth noting that in the same survey, 28% of participants said the COVID-19 pandemic has led them to re-evaluate how they plan for long-term care.
For those who don’t have a health care strategy, a good place to start could be by addressing the potential cost of long-term care in the future with insurance coverage.
And if Medicare weren’t already puzzling enough, income withdrawals from your assets can affect your Medicare premiums, so let’s talk about what might work for your specific situation. Of course, good health care starts with great self-care, so stay focused on what’s in your control — maintain a healthy diet, exercise more and limit stress.
Piece No. 4: Put your income on autopilot
Many of us view the money we have accumulated as “untouchable,” when it was actually designed to be spent in retirement. And while the desire to avoid overspending is admirable in the discipline it shows, it means you could be missing out on all the fulfillment you deserve in life after you leave the workforce. To help avoid this, one option for spending more comfortably in retirement is automation.
Automation is an effective method of saving and investing to accumulate assets. For example, you may automatically contribute to your 401(k) or other retirement funds. But what about using the power of automation in retirement for distribution? Consider converting some of your assets to a steady stream of income, and automatically activating a withdrawal plan that can help fuel your retirement possibly without the worry of running on empty.
Piece No. 5: Let’s talk about our life-centered planning process
As you focus on saving for retirement, it’s important to understand your history, values, motivations, and priorities. These things provide the framework for making choices with greater purpose, less guilt, and more confidence.
Content in this material is for general information only is not intended to be a substitute for individualized financial advice. Please consult your legal advisor regarding your specific situation.