Are you determined to make 2018 the year you get your retirement planning back on track? If you feel like you’re behind on your retirement savings efforts, don’t worry. You have company. A 2017 Gallup study found that more than half of Americans are worried that they won’t be able to afford retirement.1
The good news is it’s never too late to course-correct if you feel like you’re behind or off-track on your planning. A few simple changes may be all that’s necessary to get you back on track to live the retirement you’ve always imagined.
Have you put off saving for retirement? You’re not the only one. According to a recent study from the Economic Policy Institute, the average family between the ages of 44 and 49 has only $81,437 saved for retirement. That number is $124,831 for those between ages 50 and 55 and $163,577 between ages 56 and 61.1 While those numbers might represent a good start, it’s fair to say they’re not sufficient to fund a long retirement.
The good news is it’s never too late to get started. You may have to make some adjustments to your plans and vision, but with some discipline and focus, you may still be able to fund an enjoyable retirement.
Retirement is a major financial challenge for many workers. In fact, according to a study from Gallup, it’s the top financial worry for 54 percent of Americans.1 They’re concerned that they won’t be able to save enough money to fund their desired lifestyle in retirement.
Retirement planning isn’t just about saving, though. While it’s important to accumulate assets during your working years, you also need a plan to make those assets last throughout retirement. It’s possible your retirement could last decades, so you’ll need a strategy to make sure you don’t outlive your money.
Do you have a bucket list for retirement? If you’re not familiar, a bucket list includes all the things you want to do before you “kick the bucket.” Your list may include things like traveling the world, pursuing a new hobby or visiting friends and family.
Of course, to check every box on your bucket list, you’ll need to have a strong financial foundation as you enter retirement. That’s why you may want to create a preretirement bucket list that includes all the financial milestones you want to meet before you stop working.
Should you live for today or save for the future? That’s the question many face as they develop their financial plans. The conservative and prudent advice is to live on a modest budget today so you have plenty of assets in reserve for future needs, especially after you retire. Commonly accepted wisdom seems to be that you should pinch pennies today in order to enjoy yourself down the road.
However, there’s also the very understandable desire to live for today. There are likely things you want to do in life that would be best enjoyed while you’re young, not in retirement. Also, given the unpredictability of life, there’s no guarantee that you will be able to tick items off your bucket list when you’re older.
If you’re like most people, you probably have a number in mind when it comes to a target for your retirement savings. But is that number accurate? According to a recent study from Fidelity Investments, it probably isn’t. The study found that 75 percent of those surveyed underestimated the amount of money they would need to fund their retirement.1
It can be difficult to tell whether your retirement savings target is accurate because there are so many unknown variables. After all, it’s impossible to know how long you will be retired. You don’t know what the economy will be like during your retirement or how much certain items will cost. You can’t predict things like medical issues or other emergencies.
Worried about your ability to afford retirement? You’re not alone. According to Gallup’s 2017 survey on Americans’ financial worries, 54 percent of those surveyed said they were concerned about not having enough money for retirement. That number is large enough to make retirement America’s No. 1 financial concern.1
Much of the stress surrounding retirement comes from the unknown. There are many variables and factors in retirement that are impossible to predict. You can’t know how long you will live or how long your retirement might last. You can’t know in advance what kind of health issues you may face. And it’s impossible to predict how economic factors could impact your retirement.
If you’re in your 40s or 50s, you may be at a career stage where your income is higher than it’s ever been. It’s common for workers to see sizable increases in compensation as they enter the later stages of their career. Their accumulated experience and knowledge help them take advantage of promotions, raises and new opportunities.
Of course, as your income increases, you may face a dilemma about how to best use that money. If you’re already maximizing your retirement savings, you may be thinking about other goals. One common financial goal is to fund a child’s education. Another is to completely eliminate debt.
For many retirees, age 65 is an important milestone. It’s the age at which you can file for Medicare coverage. It may be the age when you become eligible for company pension benefits. Once you turn 65, you may only have a year or two until you can file for Social Security. For many reasons, 65 is often considered to be traditional retirement age.
However, many workers now say their target retirement age is well beyond 65. In fact, according to a recent study from CareerBuilder, 30 percent of workers age 60 and older say they won’t retire before age 70. An additional 20 percent plan to never retire. That means half of all workers over age 59 say they will work at least another 10 years.1
Are you considering using an annuity to provide income during your retirement? That could be a good idea, depending on your needs and objectives. Annuities can be a helpful tool to create predictable, reliable income that lasts through your retirement years.
Annuities can generate income via two different methods: annuitization or withdrawals. With annuitization, you contribute a lump sum into the annuity policy. The insurance company then converts that lump sum into a lifetime guaranteed stream of income based on your age and other factors. You lose access to the lump sum, but you receive a stream of income that’s guaranteed for life.
Carstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future.