3 Most Important Things To Plan for Your Retirement

by Fern LaRocca CFP®

in 401K,401K Maximum

Most of us are not prepared for any type of retirement, and I define retirement loosely like part-time worker, career changer, transition to self-employed, etc.  Currently only 14% of employees are on track to replace at least 80% of their income in retirement, and at least 50% of employees across all age and income levels reported never having a retirement projection done to determine their income needs or to build wealth to meet their future needs.

  1. One of the reasons I think this is happening is because people need to spend some time just brain storming what their life would be like without their current job. How would they spend their time? Personally one of the reasons that I took to semi-retirement so easily is because I already imagined a life of writing and coaching and reading when I had the extra time that never came when I was working.  A Coach or your Financial Advisor should have the skills to help you think about all the options you will be having instead of the focus on what you are leaving behind.
  2. By being mindful and aware of your health condition, you can reduce potential health care expenses. Only one third of employers with over 5,000 employees will subsidize pre-65 retiree medical coverage. That is a drop from 47% in 2009, according to a Pricewaterhouse Coopers study.  Having a conversation about supplemental health care costs is an important part of retirement planning.

I had a couple who was downsizing their home before they retired. One spouse had knee problems for years. They lived in a two story home and were considering purchasing a smaller two story home. After I brought up the point that maybe they should consider a ranch style home, they agreed that would be a better choice.  Again, be mindful and aware of health and family conditions when retirement planning.

  1. You should know all of your options before you make financial decisions. Many people are confused about when they are eligible for in social security and other government benefits and how to make a claim. The same confusion exists when to taking distributions from retirement plans. For example, is it better to take social security at 62 or later?  How do benefits change if you are a widow or divorced?  Should I take money from my Roth first or my 401K? All of the answers to these questions depend on your personal situation, but should not be taken lightly. You can’t go back and rescind many of these decisions; so take your time to figure out what is right for you and you will have no regrets and you will save substantial money.

Planning for your retirement may seem like a daunting task to be put off for another time. This is not a good mindset.  It will cause you stress and worry. When clients view retirement planning like they do when they plan their vacation, it can become an exciting task with lots to look forward to in this next chapter of their lives. Just think about all the things you have put off because you didn’t have the time or the money. Planning ahead to build wealth for your retirement trip will make it a prosperous and happy journey.

photo by: 401(K) 2012

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