In a perfect world, every person’s retirement planning process would span multiple decades of working life. After all, the earlier you begin saving and planning for your retirement, the better your chance of hitting your goals and enjoying your golden years without financial stress and anxiety. Of course, many people don’t begin thinking about the retirement planning tips they need to implement until they are well into adulthood, and it’s easy to feel behind. No matter where you are on your retirement planning journey, there are steps that you can take to bring you closer to your goals. The retirement planning tips below are useful regardless of your age and can help you can feel more confident in achieving the retirement of your dreams.
Retirement Planning Tips for the Under-50 Crowd
If you’re still in your twenties, thirties, or forties, you have quite a few working years left. These two big-picture tips can serve you well:
1. Clarify Your Goals
You can’t properly plan for the future if you don’t have a clear idea of what you want your retirement to look like. Do you want to start a new business? Take off and travel the world? Perhaps you want to focus your time and energy on helping to care for your grandchildren. Whatever picture you envision when you think about your future, that’s what will help guide you as you begin planning and saving for your retirement. Even if you think that your plans may change down the road, getting into the habit of taking a big-picture view can give you the momentum you need to take action in the present.
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2. Save Early, Save Often
Once you’ve got a vision of your ideal retirement in mind, you can begin mapping out exactly how much you need to save to make that dream a reality. You can figure this out by talking with a financial advisor you trust or utilizing one of the many online resources available to help people plan for retirement, such as these tools from USA.gov.
Once you have an amount determined that you need to save, you can figure out how much you need to be putting away each month to meet the desired amount by the time you retire. Be sure to save as much as possible – as often as possible – to help you reach your savings goal. Don’t forget that you can use tax-advantaged savings accounts, like IRAs, HSAs, and 401(k)s to not only help you build your savings but also gain some valuable benefits while you’re at it.
Retirement Planning Tips for Ages 50-64
As mentioned above, early planning is ideal. However, there is still value to be gained from these three retirement planning tips if the end of your working years is already in sight:
1. Design an Income Strategy
As you near retirement, it’s time to get specific. Now is the time to begin thinking about the logistics of how you plan to support yourself financially once your traditional paychecks stop. You’ll want to think about how your assets will work together to provide a reliable income stream. Consider your Social Security benefits, the Required Minimum Distribution (RMD) amounts from your retirement savings accounts, any pensions you might be set to receive, and any investments income. It can be quite complicated to plan out how all the pieces of your planning will fit together to create the larger framework for your retirement so it may help to sit down with a financial advisor you trust to put an income strategy in place.
2. Reevaluate Your Investment Strategy
As life evolves, your portfolio may need to also. The investment strategy you employ when you’re in your 30s and 40s may not be the right strategy to maintain as you begin to reach retirement age. Young investors have a lot more freedom to take risks because they have plenty of time ahead of them to make up for any losses they may experience. However, as you near retirement, you’ll want to look closely at your level of risk and determine what makes sense for this phase of your life. In many ways, now is the time to change your priority from growing your wealth to preserving your wealth. So, you’ll want to look at your portfolio and make any adjustments needed to ensure that you’re mitigating any unnecessary risk and maximizing your chances for a secure retirement income.
3. Consider Long-Term Care
It can be difficult to think about not being able to care for your own basic needs, but the majority of retired adults will require long-term care – 70%, according to the Department of Health and Human Services. While this may or may not be a surprising statistic to you, the fact of the matter is that long-term care is incredibly expensive – and the cost is only going up. Take this time before retirement to get a plan in place as to how you’ll pay for long-term care, should you need it. You may want to look into purchasing long-term care insurance that will foot the bill – just remember, it’s generally better to lock in premiums when you’re younger, so you’ll want to do this sooner rather than later.
SEE ALSO: Do You Need to Adjust Your Retirement Mindset?
Retirement Planning Tips for Those 65 or Older
If you find yourself on the verge of retirement and not feeling as financially ready as you’d hoped, these two retirement planning tips can help:
1. Build a Spending Plan
Financial planning articles on retirement and finances often focus too heavily on how to save for retirement rather than how to spend once you’re in retirement. While saving is an incredibly important aspect of retirement planning, how you manage your money once you leave the workforce is equally as important. Typically, retirees fall into one of two camps when it comes to spending in retirement: they either spend too much and find themselves at risk of running out of money, or they don’t spend enough and find themselves sacrificing things they don’t need to out of fear they’ll run out of money. The goal is to strike a happy medium where you’re able to enjoy the fruits of your labor without putting your finances at risk.
2. Get Smart About Taxes
A significant threat to any retiree’s financial stability is unexpected taxes. As you begin to withdraw from your various taxable and tax-deferred accounts, you’ll want to be aware of how that money will be taxed and what you’ll owe each year. It’s typically best to tap into your taxable savings accounts before dipping into your tax-advantaged accounts, especially as the potential for higher taxes looms on the horizon. Due to the ever-changing and complicated nature of tax law, it’s usually very helpful to speak with a tax professional about the best strategy for your unique circumstances.
Final Thoughts on Retirement Planning Tips for Any Age
Regardless of where you are on your personal retirement planning journey, there are steps that you can take to help bring you closer to the dream retirement you’re imagining. It can be overwhelming to think about saving enough and managing all the moving parts that go into retirement planning, which is why beginning sooner rather than later can be advantageous. Try to take your planning one step at a time as you grow in your career and approach retirement age.
At Resolute, we help our clients navigate the complexities of retirement planning and we meet them where they are – regardless of age or stage of life. We strive to help each client feel financially empowered so they can enter retirement confidently. Contact us today to begin a conversation with one of our financial advisors about your retirement plans to see if we’re the right fit for you.
