Thinking About Retirement? Follow These 7 Steps to Ensure Optimal Financial Stability

Ask the experts. It’s never too late to start planning for retirement. As the cost of living increases, your retirement savings requirements also increase. Most experts agree that the best way to reduce anxiety about retirement is to create a financial plan and invest and save consistently.

If you plan to depend on social security for your retirement, you should realize that most people receive about 40% of their pre-retirement income from social security. You’ll need to develop alternative ways to fund your activities through investments, savings, income-generating assets and even part-time work.

We’ve compiled seven steps to ensure you optimize your financial stability at retirement time.

Source: Federal Reserve Board of Governors

1. Create a Plan Well In Advance of Retirement
Many people feel they need to wait to create a retirement plan until later in life. However, it’s beneficial to begin planning early. A financial planner will provide guidance and help you optimize your retirement savings plans using a varied set of investment and savings tools. This strategy is fundamental to enjoying an active and satisfying retirement.

Starting early will allow you to adjust your plan based on life events. The future is uncertain and can throw a variety of challenges at you on your journey. Developing a plan helps you deal with those unexpected changes and reduces your feelings of anxiety as you approach retirement age.

2. Optimize Savings and Investments
Determining how much to save and how to invest are two of the most important decisions you can make as you plan for retirement. Everybody has a different level of risk tolerance, and some people prefer lower risks knowing they won’t lose their money. Others prefer to throw the dice and participate in riskier investments in hopes of greater returns.

A financial plan will help you see how savings and investments will impact your portfolio and make essential decisions regarding retirement, like when to apply for social security, protect your assets, and have enough money for long-term care or other costly situations.

3. Develop a Spending Budget
You must put enough money away over time to create your retirement fund. To do that, you need to know how much money you need to live on and how much disposable income you require for vacations, automobile purchases and other events like weddings and graduations.

A financial plan will allow you to see how much money you can spend and still have enough to put away into savings and investments.

4. Plan for Changes
You will need to keep enough money available to plan for sudden changes in your life. Events can happen at any moment and instantly impact your nest egg. A financial plan will allow you to prepare for different scenarios without affecting your retirement plans.

A good financial planner will help you step through your possible roadblocks and help you prepare for these changes without withdrawing money from your savings or borrowing against your investment funds.

5. Deciding When to Retire
Knowing when to retire is an important decision that will impact how much money you need and how long you plan to be in retirement. Since people are living longer, they need more money for retirement. Delaying your retirement date may increase your monthly social security payments. One way to increase social security payments is to delay your retirement date. Other factors may impact how much money you receive from your plan. Since everybody’s circumstances are different, you should contact a financial planner to run through your options.

6. Healthcare and Long-Term Care Planning
Your retirement plan should include healthcare costs, nursing home costs and other long-term care expenses. According to Genworth’s Cost of Care Survey, a private room in a nursing home costs $290 per day or $8,821 per month.

A financial planner will help you plan for long-term health costs and advise how to save for these costs or protect your assets with a trust or assets.

7. Estate Planning
One costly mistake people make is not creating an estate plan. While it might not be pleasant to discuss your mortality, it is crucial to plan for unpleasant events in a way that protects your family now and well into the future. Estate planning encompasses several different strategies to protect against inflation, distribute assets after death and protect your home against being used for long-term care costs.

How to Get Retirement Planning Advice

Creating your financial plan by reading books and using planning software is possible, but if you don’t have the time or expertise, then engaging a financial planner is the next step on your pre-retirement journey. Select a financial planner with knowledge in all areas of investments, savings, annuities, insurance and estate planning.

Eagle Wealth Consulting financial planners have the expertise and fiduciary duty to provide honest and expert advice. Learn more by calling 678-222-3429 or by filling out the quick contact form on our website.