Retirement / Estate Planning

On the surface, retirement planning hasn’t changed all that much over the years. You work, you save and then you retire. But while the mechanics may be the same, today’s savers are facing some challenges that previous generations didn’t have to worry about.

 First of all, life expectancy is longer, which means you’ll need your money to last longer – potentially into your 90s. Bond yields are also much lower than they used to be, which means you can’t buy a few fixed income instruments and earn a double-digit return. Then there is the health crisis due to the coronavirus pandemic.

This is compounded by the fact that more companies are moving away from defined benefit pensions —which guaranteed you a certain amount of money in your golden years — to defined contribution plans, which are more subject to market ups and downs.

So, how can you have the retirement you’ve always wanted? After all, retirees want to experience all the things they couldn’t do when they were too busy working. Exotic travel vacations, marathon running, novel writing, spending more time with friends and family — the possibilities are almost endless. There are several steps that can be taken to setup a solid retirement plan.

How much do you need to save for retirement?

One of the hardest parts about preparing for retirement is thinking about life as a 70-something. A lot of people get so overwhelmed about saving for an unknown future, that they end up not saving anything at all. Thankfully, planning for retirement is not overly onerous, but you will need a road map — one that can evolve over time — to keep you on track.

The first place to start is to think about what your life might look like in retirement. Sit down with a pen and paper and write down your retirement goals.

How to start saving for retirement

While starting early is always important – even $25 a month in your 20s is helpful – it’s OK to set money aside for more immediate needs first and then start tackling retirement in your late 30s and early 40s. However, you don’t want to wait much beyond that because you’ll need time to put money into a retirement account for that money to grow. The longer you wait the more you’ll have to sock away yearly making the challenge a lot more difficult.

Things to keep in mind when getting started

 

Create a Budget

This is your current budget, which takes into account all of your present-day income and expenses. While you should have some idea as to what you’ll need to save per month based on your retirement goals, you also need to make sure that you have that money to save. It’s a good idea to put retirement savings as a line item in your budget, just like food and shelter costs, so that you can set aside those funds every month.

Set Automatic Transfers

This is a tool you can set up between your checking account and your retirement account so you don’t forget to save. Set it up so that on the same day every month — maybe it’s the day you get paid — funds you’re earmarking for the future go from your bank account into your investments. By doing it this way, there’s no risk of you spending that money.

Create an Emergency Account

Having a separate emergency account — usually with about three to six months of salary saved up — will allow you to cover any unexpected costs without throwing your retirement plans out of whack.

 

Pay Down Debt

One goal for everyone should be to reach 65 debt-free. That includes credit card debt — and especially the high-interest reward card kind — car and mortgage loans, any student and other big loans. The reason is simple: you don’t want to be going into your non-earning years owing money.

These are just a few of the things that we will guide you through while we are helping you plan your retirment and estate. 

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