There’s an old saying that every journey begins with a single step. When it comes to retirement planning, have you taken your first step? And what about the many steps that follow?
If you have a retirement plan in place, fantastic. You’ve taken the first step, and it may be time to think about making your money work for you more effectively. But if you haven’t started your retirement planning, it’s okay. “It’s never too late to start,” says Emily Dafferner, a CERTIFIED FINANCIAL PLANNER™ at Reliant Investment Management.
Regardless of which camp you fall into — needing to get started or needing guidance on the next steps — Emily and the Reliant experts can help you map out a successful roadmap to retirement. Here’s what they recommend.
No GPS necessary, but you do need to know what you want from your retirement. Clearly define your needs, including healthcare, utilities, car and home maintenance, and groceries. Just as carefully, consider your wants. Do you long to travel? Keep up a large home with plenty of room for the grandchildren? Expand your garden? Embark on DIY projects? Take up or improve your golf, tennis or triathlete skills?
Knowing what you want your retirement to look like and setting realistic goals for achieving it is a great first step. “Retirement is not very tangible,” explains Emily. “It helps if you imagine what your ideal retirement will be and what you will want to do. That can give you a specific goal, something more tangible and specific to work for.”
Next, start those engines! “Do something,” Emily continues. What that “something” is will depend on your circumstances. Those next steps could look like:
- If you are employed, take advantage of any employee benefit plans offered, such as a 401(k), Simplified Employee Pension Plan, or Profit Sharing Plan. Many come with employer matching. “Don’t let free money pass you by,” offers Emily.
- If you are not employed or are self-employed, look into opening an IRA or other retirement savings option, and start putting money in monthly. Set up an automatic deposit so you won’t have to think about it.
- In either case, if you don’t already have a savings account, open one and set up an automatic deposit with every paycheck.
Plan for the Long Haul
Significant improvements in healthcare and an increased awareness of the importance of lifestyle have led to longer, healthier lives — but more years come with a need for more money. Americans can no longer assume that preparing for 20 years of retirement is enough, Emily explains.
A few tips for the road to retirement include:
- “Realize that you need to replace your income when you retire,” says Reid Wesson, a CFP® with Reliant.
- Social Security is supplemental, not a replacement. “You can’t be overly reliant on government programs to have the freedom and ability to maintain your lifestyle,” Reid adds.
- Saving is a basic step that is often overlooked or postponed. You may feel that the little bit you can put away early in your career just isn’t worth it, but the opposite is true. Every little bit of money helps, and the earlier you start, the more time your money has to compound and grow. “Don’t wait to pay yourself with what is left over from monthly expenses,” Emily says. “Pay yourself first.”
- As your income grows, your savings should grow with it.
On the Road
If you’ve already started on the road to retirement with various investment vehicles, Reid says his best advice is pretty simple: Be patient. The stock market fluctuates, and returns will ebb and flow, but most tend to end on an upward trend.
Other insights for the road to retirement:
- It’s a common misconception that you need to get very conservative with your investments immediately after you retire. Not so, says Reid. “The change needs to be gradual. You need your money to last.”
- Do ask for help and advice. Retirement planning can seem overwhelming, and making the right choices for you can seem daunting. The help of a professional you trust is a boon you should not overlook.
- Don’t panic if you have not already started to plan. “If you are closer to retirement age, you may have to make modifications to your dream plan,” says Emily, “but it’s never too late to start.”
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