Retirement Plans: One Size Does NOT Fit All
Americans live longer, they retire later and standards of living are high and are expected to increase in the coming years. So, while savings accounts are still important, they no longer suffice for being the only method of savings. Today’s retirement savings plans are bit more complicated, incorporating many different elements—401k plans, IRAS, equity stocks, property investments, non-correlated investments, etc.
Planning for retirement takes a lifetime of saving. But, unlike the generations before us, Americans today have many different options when it comes to saving for that big day!
So, how do you find the right plan for you? And, is there a specific plan that you should use? There is not a specific plan that you can pull out of a box that meets your financial needs, but, with the help of a certified financial planner, you can create a retirement savings plan based on the age you plan to retire, your expenses (today and later), expected income through pensions and investments, what you want to do after you retire, etc.
So, what steps should you take? Here’s a few that I recommend.
• Gather an understanding of your current finances. In order to develop your plan, you need to do a little research about yourself. Review your current financial statements, investments, 401ks, IRAs, property investments, savings, etc.)
• Determine your life goals.The first thing I ask my clients (many who are retired or close to retirement) is what do they want to do once they are retired, i.e., spend summers in the South, sail around the world, start a foundation, etc.) Also, depending on what age bracket you fall into, you may want to define the age that you want to retire.
• Determine how far along you are in your retirement savings and calculate how much you need to save to retire. It’s sad, but many Americans are not saving enough at this time. Those who are planning to retire in the next couple of years are in the “catch up” period. Don’t be one of them! You will have to save more than $1 million to sustain a good retirement life. So, plan now!
• Work with your financial advisor to manage your plan and determine strategies that will best help you reach those goals. Consider your age, risk factor, assets and debt, when developing the strategies.
• Create a customized retirement plan, and be sure to review it on annual basis with your financial advisor.
How far along are you in reaching your retirement goals?
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Retirement planning now seems to be the topic of the day but is to be fraught with many misconceptions and assumptions. One of the major ones is that retirement means the same thing to everyone. This is supported by the evolution of concepts like “nevertirees”
Having “rules of thumb” makes traditional retirement planning appear too finite and predictable. Unfortunately it’s not.
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I think it’s safe to assume our children face an entirely different set of circumstances then we do when it comes to retirement planning. What will the cost of living be, what will the cost of health care be, will Social Security even exist?