Category: Retirement

Retirement planning is complicated.  It may not be rocket science, but there are a lot of variables that can affect how you are going to do financially 10, 20, 30 or even 40 years down the road.  As a result, too many people don’t do any planning.  Even worse, because they don’t have a plan they don’t give enough thought to saving for retirement.

Most Americans Have Little Saved For Retirement

A fifth of Americans don’t have even $5,000 saved.  Nearly half of all Americans now expect that they’ll have to work beyond the traditional retirement age.  Those numbers indicate that most people have put off retirement planning and saving, which brings to mind the old refrain “if you fail to plan, you are planning to fail.”   The truth is that you can do it, but most people need help.

There are so many variables in life that tend to make planning difficult.  How long will you live?  What will your health be like as you age?  What will returns be on stocks and bonds before and through your retirement?  How fast will the cost of living go up?  Will your income increase between now and your retirement?  How much income will you need when you retire?  What will the tax rate be in the future when you are retired?

Conclusion

That’s where having a financial planning advisor is so helpful.  They are not prophets, but they can create a plan with conservative assumptions that can be updated from time to time to provide guideposts and milestones on your way to retirement.  Advisors who specialize in retirement planning can begin a discussion with anxious individuals and couples and offer the appropriate level of support.   An advisor’s job is to help you create a path to financial success and to teach and encourage the behavior that helps get you to your goal.

A good advisor helps remove the fear of failure and encourages good financial habits.   Time is your most valuable asset and the clock is ticking.  Call us today or use our contact page to get started.

Participants in a recent study answered that they arrived at the appropriate amount they’d need to fund their retirement by guessing.

Retirement is too important and too final to go into with guesses.

When you tell the boss that you’re leaving your position, you should have a plan for what comes next.  If it’s a promotion, another job for more pay, or something that gives you more responsibility and a clearer career path, that’s a good thing.  On the other hand, if you’re leaving to start your retirement, with years (or decades) without a steady paycheck, you had better know what you’re doing and have a clear plan.

Retirement comes with more than just leisure time.  We continue to age, visit the doctor more often, and our skills get outdated, making it more difficult to get another job if we find ourselves in need of additional income.

True story: I knew a retired rocket scientist who got a job in the tool department of a hardware store to supplement his retirement pay to maintain his standard of living.

A financial advisor who specializes in retirement planning can help facilitate discussions on several key issues, enabling genuine retirement planning to take place.

If you or someone you know is contemplating retiring, give us a call.  We’d be happy to sit down over a cup of coffee and discuss what you need to retire.

We have written a lot about retirement because it’s critically important for so many people. We have years of experience getting people prepared for retirement and beyond.

Here are nine things that people facing retirement need to know:

1. When you retire your living expenses may not go down. In fact, the first few years after retiring you may spend more because you have more time for leisure activities such as travel and hobbies.
2. Inflation is a very big problem for retirees. The cost of basic living expenses like housing, food, utilities, and clothing will go up over time but your retirement income may not keep pace. Inflation will erode the purchasing power of your savings and pensions. Most people will live decades in retirement. Create a plan to offset the effects of inflation.
3. Try to determine how much of your basic living expenses are covered by Social Security and pension income. Fewer companies offer pensions today than ever before. This makes wise investment decisions more important than ever.
4. Decide when to apply for Social Security. The longer you delay the higher your monthly payment. If instead of claiming at age 62 you wait until 70, their payments increase by more than 75%.
5. It’s possible that both Social Security and pension benefits may face cutbacks in the future. Both are underfunded. These are serious concerns, especially for those who have many years before retirement.
6. Everyone is eligible for Medicare at age 65. Read the Medicare rules carefully. If you don’t sign up during your initial enrollment window, you can face a 10% increase in Part B premiums for every year you don’t enroll unless you qualify for an exception. The average 65-year-old couple needs $285,000 to fund health care retirement costs. That does not include long-term care expenses.
7. Be prepared for the possibility that your lifespan will be longer or shorter than the typical actuarial estimates. The median life expectancy for males is age 89 and for females is 91. 10% of males are still alive at age 98, 10% of females live to 100. Many elderly are concerned about outliving their savings.
8. Make wise investment decisions to fill the gap between your guaranteed income and what you plan to spend. Avoiding major losses. Most people need investment advice. Find an Investment Advisor who is a fiduciary, preferably an independent fee-only advisor who is also a CFP® (Certified Financial Planner™).
9. HAVE A PLAN BECAUSE YOU ARE GOING TO BE RETIRED FOR MANY YEARS.

Check out our website to find out how a Korving & Co. Certified Financial Planner™ professional can make your retirement plans a reality.

In theory, $1,000,000 saved for retirement should allow you a pretty decent lifestyle during your golden years.  Getting there is not nearly as difficult as it looks, especially if you are young and smart about saving.  

Young people have an advantage that older folks don’t have: time is on their side and the magic of compounding allows them to put less money aside to reach that million-dollar goal.

Here’s how a 25-year-old can retire at age 65 with a million dollars:  put $322 each month into a tax-sheltered account, like an IRA or a 401(k), and if you invest it wisely and get 8% average annual return until you’re 65, you will be a millionaire.  Your total contribution to your retirement will be under $155,000, the rest is earning on your savings.

If you start later, here’s how much you will have to save monthly:

Of course, this assumes that you invest to get an average annual return of 8%.  That’s not unreasonable if your portfolio is heavy in stocks and you have a long-term time horizon.  

If you play it too safe with your investments, you will see lower returns and therefore you will need to compensate by making larger contributions to have $1,000,000 accumulated by age 65:  

If you are like most Americans, you are a few years behind on your retirement savings.  However, please note that the examples assume that monthly contributions stay the same. In reality, as we get older and earn more, we can usually afford to put more money aside.  This may be a good time to meet with a financial planner to determine how to reach your retirement savings goal. Call or email us today.