Prepare for Retirement

One of the most significant challenges that can impact your life is if you reach a predetermined age of retirement and you don’t have enough money to actually retire. This can be an incredibly challenging time. There are other occasions where retirement can be challenging. While there are opportunities to recuperate if you are in your thirties or forties, the economy can make your prospects for retirement even more challenging if you are older. The economy, prospects for gainful employment and stagnant wages make putting aside an appropriate amount of money to retire quite challenging. 

The turbulent financial markets have made it incredibly hard for anyone, at any age to appropriately plan for retirement. This turbulence has also made it more important than ever to revise your current investment strategy to make sure that you are on track to reach your investment goals and objectives. The approaches that have been used effectively in the past are not working as well. 

It is important for you to understand that your age and expected time of retirement will dictate your strategy. While we are in no way trying to offer investment advice, our goals is for you to consider some important things to make sure that you are able to retire comfortably, based on your retirement time horizon. 

As mentioned earlier, if you have some time until you retire, specifically if you are in your thirties or forties, small and incremental adjustments in your savings or investment strategy can have a significant impact.  Now, if your retirement is within a few short years, something has to change dramatically, especially if you’ve seen reductions in your net worth. Obviously, if things are going well, don’t make changes that will hurt your portfolio balance.

We have develop a six step checklist that you can employ to determine your current state. As mentioned earlier, this is not investment advice, but a few things that you should consider. Also, this information will be contained in PDF form and as a questionnaire linked below:  

First, determine your current situation. Consider working backwards to determine whether the amount that you are saving and investing is on pace with the money you’ll need to retire. Again, it is critical that you pay attention to the time horizon. We have provided links to calculators to help you make this determination.  When using the calculator, make sure you are aware of all of your retirement accounts since you may have moved from one job to another and some of your retirement may be in an account linked to a previous job, investment advisor or savings account. 

Based on the first question, there are two things to consider. This consideration forms the basis on steps two and three. Step two assumes that you are not on track.  If you are not, the most important thing for you to do is figure out why.  There are a few things that you should take into consideration and change to get back on track.  However, examining your situation is important.  Are you saving as much as you planned? Are you maximizing the  contribution that you can make to your employer-sponsored retirement plan or individual retirement account (IRA)? Has inflation caused the amount of money you’ll need to retire to increase?

Step three presupposes that you are on track. If so, obviously, you should continue doing what you are doing, but increasingly monitor your savings and investments to ensure that you remain on track. 

Step four is for you to determine what you’ve done to get off track and actually decide what to do to get back on track. There are a number of options. Of them, revisiting your goals, stretching out the time horizon until you retire or reducing the amount of money you plan to spend in retirement are viable options. You could also increase your level of  portfolio risk by carefully considering your risk tolerance. Before deciding on any of these options, it would be wise to consult with a Financial Advisor who can help steer you in the right direction.

Step five is to identify and take advantage of opportunities to improve your investment returns without increasing the risk. There are a few strategies that can help you do this including tax minimization, insurance modification, and other tax mitigation strategies. Again, check with an advisor before choosing any of these options. 

Finally, identify and seek to increase all of your various sources of income. First, calculate your income from all of the various sources. If you are retiring soon, you will need to get the most out of that income. In other words, based on your expenses, you will have to maintain a specified amount of monthly income to maintain your standard of living. The sources that you must consider will include Social Security and traditional pension fund payments, and where applicable, rental income. If your sources of income can be maintained over time, you can be more conservative in your investment strategy. However, if they are unreliable, consider a more aggressive path. 

Now, after you’ve completed these six steps, you will be well on your way to a strong and money-free retirement. Now, once you’ve actually retired, there are things that you will be required to do. These steps will help you face retirement more comfortably.