Retirement planning does not need to be complicated or overwhelming. In fact, in many ways it can be surprisingly simple, even fun at times as you‘ll see here. While individual situations vary, the five basic components of a successful retirement plan include:
- Lifestyle: Retirements today frequently last 20-30 years. How do you wish to live during this period?
On one hand the media is full of images of successful and happy retirees enjoying life. On the other, it tells stories of seniors who can’t pay their bills, especially health care or cannot afford to stay in their home. Typically Social Security and Medicare pay only for a portion of one’s retirement. The balance is often covered by a pension and personal savings. Have you considered postponing retirement or working part time in your later years?
- Income: How will you pay to live the retirement lifestyle you desire?
As fewer companies provide traditional pensions, saving for retirement has become the worker’s responsibility. Thankfully today there is a wide range of products and services that can help fund one’s retirement. But how will you be able to utilize them to provide for your financial future?
- Risk Tolerance: Each investment has some degree of risk. However, the biggest risk of all is not planning. The goal to successful investing is to understand your personal level of risk or “risk tolerance,” and invest accordingly. Generally speaking, an advantageous investment return may not be possible without some risk, meaning it’s possible that you may lose some or all of your original investment or principal. Asset allocation is one way we aim to exercise some control over how we invest.
- Long Term Care: Who will take care of you and/or your spouse as you age? This can be costly in ways you may not imagine today. You’d probably want to protect yourself and loved ones from having to make difficult financial choices or rush decisions. You may have expectations for your retirement lifestyle or legacy you’d like to pass to the next generation. But what if you need long-term care? Will your savings cover these costs or will you need to spend down your assets? A long-term care policy can cover long-term care expenses and preserve your assets.
- Help from a Financial Advisor: Opening a dialogue with an independent financial advisor can be one of the most valuable relationships you can have, especially as you age and your life becomes “financially complicated.”
Today dual-income households, business partners and those with moderate to significant assets often work with an independent financial advisor to help protect their long-term personal and financial interests. To maintain your lifestyle, you will probably need at least 70-80 percent of your current income level in retirement. While a long life is often a great blessing, it can also present financial hurdles, namely the idea of running out of money. A financial advisor may help to keep that from happening.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.