The past few months have caused many to worry about their financial future, and some may assume they can recoup their losses by delaying retirement or working in retirement. A recent survey found that 54% of Americans say they’d like to continue working in retirement, while 40% say they worry they won’t be able to retire at all. What they may not realize is that many older workers are forced to retire earlier than expected. A study showed that 26% retired earlier because of job loss, and this number is likely higher after the coronavirus pandemic. Rather than assume you’ll be able to work as long as you want, you might opt to prepare for the future no matter what it may bring. Here are three strategies for creating a solid retirement plan.
Assess Your Risk Tolerance
If the past few months have caused you to rethink your investing strategy, the first step may be to assess or reassess your risk tolerance. A financial advisor can help you with this, and then adjust your portfolio and investment strategy going forward. Having a well thought out investment strategy that suits you specifically might help you avoid panic and hasty decisions based on emotion in times of market volatility.
Decide Where Your Income Will Come From in Retirement
You will likely have more than one source of income in retirement if you plan on maintaining your current lifestyle. A Social Security benefit can be an important part of your retirement income, so a Social Security maximization plan should be part of your retirement plan. You may also consider other types of reliable retirement income, how to make the most of your 401(K) or IRA, and alternative investments. Since everyone has different retirement income needs, a personalized plan is important.
Plan for the Long-Term
You may have mastered making a yearly budget, but have you planned for the next 30 or more years of your life? Retirement planning requires a long-term view of your finances, from your income needs to your tax burden to your estate plan. An advisor can help you with tax minimization in 2020 and beyond to take advantage of tax-saving opportunities and avoid tax traps. You’ll probably also want a plan for passing your wealth to your loved ones in a tax-efficient manner, and an advisor can help you with this as well.
There are no “do-overs” when it comes to retirement – preparation is key. If recent market ups and downs caused you to panic or make hasty decisions, an advisor can help you create a solid retirement plan that includes an investment strategy and a retirement income strategy. We’re offering complimentary financial reviews if you want to talk and get started on a plan for the next 30 years of your life.