Saving for retirement begins with your vision for the future.
Picture the life you want to live when you retire. Think about how old you’ll be, what you plan to do and how you’ll live.
- Do you plan to retire from full-time employment as soon as possible, or wait until you’re fully eligible for Social Security?
- What’s it going to take to maintain the lifestyle you want in retirement?
- Do you plan to travel more—whether that means exotic vacations or extended visits to friends or family out of state?
- What if your health takes a turn, since medical expenses increase as we age?
Anticipating whether you’ll have 20, 30 or even 40 years of retirement will help you determine how much to save.
It’s important to assess what you’ve saved, the rate at which you’re currently saving, and how much more you need to meet your goals. But first, you’ll want to put in some time to figure out those targets, based on your desired lifestyle.
Retirement savings options
For many of us, there are two primary retirement savings vehicles: Employer-provided plans and self-directed savings.
Employer-provided plans often allow pretax savings for retirement, as do self-directed IRAs. Based on your goals, and the limitations of those types of plans, you may want to explore additional options, such as those offering tax-deferral advantages like annuities.
Retirement saving is a long-term proposition. With the right diversification approach, you may be able to help protect your savings against market shifts while balancing risk to help your savings grow. Periodic reviews can help you see if you’re on track to achieve your goals.
Staying the course with saving
Life is full of surprises that will impact your financial situation—from welcoming a new baby, to saving for a child’s education, to losing a job or facing an unexpected illness. These life events can all create disruptions in your savings that force you to reevaluate your plan, your goals and expenses.
Keep focused on the amount you want to save for retirement, and try not to be distracted by potential purchases that you may see as financial opportunities. Buying a new car that’s on sale now may seem like a good idea, but it could mean you’re compromising your goals – causing you to wait longer and save less.
Conduct an annual review of your plan to monitor situations that may impact your retirement savings, such as market risk and taxes. You’ll also need to be attuned to inflation, healthcare costs and longevity, which can impact your post-retirement income.
How a financial advisor can help
By working with a financial advisor, you’ll have access to resources, products and tools that you may not have available if you’re going it on your own. A financial advisor can also provide an objective, non-emotional, third party who can offer support and help keep you on track!
LCN-1746115-032817 – B