Retirement Comes A Lot Faster Than We Think
Retirement comes a lot faster than we think. What many people donâ€™t realize is how the last 10 years before you retire can make an enormous difference in how comfortable your retirement years will be. Here are a few financial steps to take as you come down the final stretch before retirement:
Increase Your Savings.
o Start by increasing the amount you put in tax-advantaged investments, including your 401(k), IRA, or other plans. Remember you make larger contributions to many of these plans once you reach a certain age, and if you can, you should.
Be smart about Social Security.
o Each year you wait until age 70 adds 7-8% to your monthly Social Security benefit. Drawing Social Security at 62 isnâ€™t the best option for most people. Talk with a financial advisor about when to claim Social Security.
Get a money checkup.
o Itâ€™s simple. Call a financial advisor like us and weâ€™ll help you set your financial goals. Even if youâ€™re sure youâ€™re heading in the right direction, itâ€™s always a safe thing to do to get a second opinion from a professional.
Expect to work longer if you haven’t saved enough.
o If you can’t live on your Social Security and other income, you likely will have to keep working. Even working a part-time job could help you make ends meet.
Figure out how much you’ll really need when you retire.
o Unless youâ€™re going to move to a cheaper area and slash your housing expenses, it’s unlikely that you’re going to spend significantly less in retirement than you do now. You shouldnâ€™t spend more than 4% of your investment principal annually.
Get out of debt.
o Don’t go into retirement owing money. The interest you’re paying on loans alone is money you could be investing for the future.
Keep the bulk of your investments somewhere they can grow.
o Try to keep at least 40-60% of your investments in stock index funds. Converting all your assets into CDâ€™s or other assets that won’t increase in value is a recipe for disaster.
Update your wills, trusts and beneficiaries.
o Itâ€™s important to keep your estate planning documents updated. Retirement accounts are distributed to the beneficiaries you name on those accounts.
Planning for your retirement can be confusing and it can be very hard to know where to start. It is important to use the resources that are available to you. Speak with people who you know that have already begun planning for their retirement. Do your own research on planning for your retirement. And speak with an expert. Consult a local retirement planning specialist or financial planner and have them put together a plan that is specific to you. Let them ask the right questions about your goals for retirement. They should be able to guide you in the right direction in order to meet your retirement goals.
For more information on retirement planning in the Everett, Washington area, consult a local Everett retirement planning expert.