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Set Yourself Up for Retirement Success - Essential Questions for Financial Planning and Goal-Setting

As we go through life, we’re aware of the fact that retirement is coming someday. We see retired folks walking in our communities, playing golf or volunteering at the local food bank. Many of us grew up watching our grandparents enjoy a leisurely retirement lifestyle—maybe you even spent afternoons or weekends at their house while mom and dad worked (or got a break from work). 

We know it’s coming and in many cases, we look forward to this phase of life. But have you started planning for what your own retirement will look like, and how you’ll get there with enough money to live comfortably? While our grandparents may have held one or two jobs in their careers, and retired on a pension, things have changed. With employer-sponsored retirement plans becoming less common, saving for retirement falls much more to the individual. That means financial planning and retirement goal-setting are more important than ever. 

Retirement Planning Questions To Ask Yourself 

Retirement looks different for everyone, based on a number of factors such as lifestyle, financial circumstances, and at what age you begin saving. To begin painting a picture of what a successful and fulfilling retirement looks like for you, ask yourself these questions: 

At What Age Do I Want to Retire? 

If you dream of retiring at 55 and traveling the world—more power to you! But you may have to put in some extra discipline now to make that a reality. And, you’ll need to make your retirement nest egg last longer, as everything from housing costs to health care will be stretched over a longer time period than normal retirement.

If you’re serious about early retirement, a financial planner like us can help you crunch the numbers to come up with a plan that works for you.  

What Kind of Lifestyle Do I Want?

When you picture your life in retirement, what do you see? Is it afternoons at home surrounded by grandkids? Or sunbathing on a sailboat off the Italian coastline? Weekly tennis games with your bestie? Maybe it’s a cabin in the woods, with nothing around for miles other than your daily fishing spot. Or perhaps it’s something else altogether. 

One major aspect of a happy retirement is determining what you really want—not what you think you’re supposed to want or what the neighbors have.

Time will be your most plentiful resource in retirement, which is why we encourage our financial and retirement planning clients to consider what an ideal retirement lifestyle looks like. Retirement mapping is our own highly-effective and joyful process for figuring that out. Investing in social wealth and activities like volunteering are a few other ways to boost your fulfillment in retirement. 

Key Considerations for a Successful Long-Term Retirement Plan

Retirement is coming, whether you’ve prepared for it or not. Do your future self a favor and face your finances. A solid financial plan is built to withstand bumps in the road, be it market turns or unexpected professional issues later in life. The following are part of a well-rounded plan for retirement.

Long-Term Care 

Most people don’t think about long-term care until they or someone they love needs it. According to Genworth, 7 of 10 people over the age of 65 will need some type of long term care support. And in two-thirds of those cases, individuals used their own retirement savings to pay for care. 

Long-term care insurance deals with the ongoing support and services needed by aging individuals who have health conditions or disabilities. The three levels of care included skilled care (around-the-clock care), intermediate care, and custodial care. Long-term care is rarely covered by regular health insurance plans, which means you need to factor this into your retirement savings plans

Estate Planning 

Many of us dream of leaving behind a legacy after we’re gone. Or at the very least, we have specific ideas about what should happen to our assets (and our bodies) after taking our last breath. Estate planning may seem macabre, which is why so many people avoid it. In reality, making end-of-life provisions gives you control and provides peace of mind for your loved ones.

From life insurance and naming an executor for your estate to making sure your fur babies will be taken care of, estate planning is key to any comprehensive financial plan. 

Tax Strategy

If you’re not careful, taxes can quickly eat up a big portion of your retirement nest egg. One of the most important aspects of working with a financial planner is putting a tax management strategy in place. That includes diversifying your mix of account types (tax-free, tax-deferred, and taxable) and setting the withdrawal order of your accounts.

At Wealth Legacy Institute, we use the tax triangle to minimize your tax burden and keep more of your hard-saved retirement portfolio in your pocket. The result is, your money lasts longer and you can keep living the retirement lifestyle you dreamed of. 

Determining How Much You Really Need for Retirement  

How much is enough? You’ve probably asked yourself this question more than once along your financial planning journey. Indeed, figuring out how much to save is one of the trickiest parts of planning for retirement. 

This is partly because there are a variety of potential income streams you might have in retirement, including Social Security, employer-sponsored plans such as a 401(k), and personal investments. Another reason is because spending in retirement can vary widely depending on your personal lifestyle and financial goals. If your vision for retirement resembles the sailboat scenario above—well, you’ll need a bit more than the person who’s whiling away the days in a riverside cabin. 

Many financial advisors recommend saving 15-20% of your income each year, or more if you’re getting a late start. If you’re concerned about running out of money, consider the 4% rule. The rule states that you can withdraw around 4% of your retirement savings annually. So, if you have $1,000,000 in retirement savings, you could withdraw $40,000 in the first year. The second year, you would adjust the $40,000 for inflation, then withdraw that amount, and so on. 

If you want to know whether you’ll be able to safely withdraw that 4% each year, multiply your current annual spending by 25. There’s no way to predict how long you’ll live after retirement, but 25 years is a pretty safe average. By this calculation, you’ll need 25 times $40,000 a year, or $1,000,000, at the start of your retirement, assuming you currently spend $40,000 per year.

If goal-setting and preparing your finances for retirement feels stressful and overwhelming, we get it. And we want to help. The fiduciary advisors at Wealth Legacy Institute can help create a personal retirement plan based on your financial circumstances and your goals for retirement. 

Contact us today to get started on the path toward a comfortable retirement.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third-party data which may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are unmanaged baskets of securities and are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. Total return includes reinvestment of dividends and capital gains. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. By clicking on any of the links above, you acknowledge that they are solely for your convenience, and do not necessarily imply any affiliations, sponsorships, endorsements, or representations whatsoever by us regarding third-party websites. Wealth Legacy Institute is not responsible for the content, availability, or privacy policies of these sites, and shall not be responsible or liable for any information, opinions, advice, products, or services available on or through these third-party websites. The opinions expressed by featured authors are their own and may not accurately reflect those of Wealth Legacy Institute®.

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