Retirement means something different to each individual. It is no longer an end but rather a transition to a new stage of life - with opportunities and advantages that have never existed before.
Retirement planning should begin long before you're old enough to retire, but it shouldn't stop there. Many of us will spend 30-35 or more years in retirement, raising concerns about outliving our money. The cost of goods and services continue to rise and with advances in health care, people are able to living longer and more vibrant lives.
Social Security retirement income is only a foundation, at best. Most of your retirement income will have to come from your company's retirement plan or your personal savings.
Your retirement plan will provide the financial foundation for your future well-being. It should contain the financial pathway to achieving the level of financial security you hope to have after you retire.
You should spend ample time considering a few important factors:
- Analyze your financial situation—Project the amount of money you will need to support yourself and any family members going forward. Consider your current financial situation and your indebtedness. Plan for potential major life events — the death of a spouse or child, birth of a child, marriage, major illness.
- Establish objectives—how close do you want your retirement standard of living to mirror your pre-retirement lifestyle? As much as possible, include in your planning every potential aspect of retirement, including activities you may want to do after retirement but don't do now — more travel or a new hobby, for example.
- Look at how you invest—How much of a risk-taker are you? Generally, younger people are more willing to assume greater investment risks. Retirees, on the other hand, usually are more conservative. Are you a short-term or long-term investor? Short-term investments - those with time horizons of five years or less - are usually considered more risky. Many financial advisors lean toward more conservative investments as retirement approaches and begins.
- Review your tax situation— what’s your tax situation? How will the situation change after you retire?
- Review your investments—do you already have an investment portfolio? What investments are included? Are you satisfied with their performance? Are they meeting your income needs now and do you anticipate that they will continue to do so after retirement?
Start planning for your retirement today
Good retirement planning is for a lifetime. Ideally as soon as you begin having an income is the time to start planning and saving for your retirement. Long-term saving and investing has proven to be an excellent way to help ensure that you will have the funds you need to enjoy your golden years. The associates of Wealth Dynamics can assist you in planning for the retirement that meets your goals and expectations.