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Getting Retirement Ready with a Fiduciary Advisor

Getting Retirement Ready with a Fiduciary Advisor

October 07, 2022
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Are you ready for retirement? It can be hard to imagine a life without work, but for many people, retirement is looming on the horizon. If you're ready to give up your day job, here are a few things you need to know:

  • First and foremost, you'll need to figure out how much money you'll need saved up. This will depend on your income and how long you plan to stay retired.
  • Once you have a good estimate, start putting away money into a retirement account or investment portfolio. You may also want to consider taking out a loan against your home equity or borrowing against other assets such as stocks or bonds.
  • Finally, make sure you're prepared for the physical and emotional challenges that may come with retirement. 

The Sign You're Ready for Retirement

The first way you can prepare includes knowing if you're ready, age-wise, for retirement. The pre-retirement age is 55 to 60, which means that your plan should be fleshed out and good to go. The actual age of retirement is around 60. This is when you're ready to enjoy what your savings have to offer and can stop worrying about waking up for work on Monday morning. How can you secure this?

Well, it's generally better to wait until after you retire to claim your Social Security benefits. The maximum age you can delay claiming benefits is 70 years old. This means that if you wait this long, you could receive over 100% of the monthly benefit that you would have received at your typical retirement age. Waiting may not be feasible for some, but it's definitely something to consider when deciding whether or not it's time for you to take that next step. 

Why Does This Matter? 

The point of retirement is to enjoy what life has to offer. Don't tell anyone, but financial planning for retirement becomes useless if you don't realize that life isn't all about the money. It's important to actually live it whether that's traveling a lot or eating out. Your lifestyle is about to drastically change, and we want you to feel secure when that happens. 

To do this, consider creating a budget specifically for discretionary spending. You may even designate one source of income, such as your investments that pay a steady dividend and offer the potential for growth, for this category of spending. This way, there’s money specifically set aside for those excursions you always dreamed of going on but didn’t have the time. 

Actualities of Retirement Planning

Once you've established you're mentally ready for retirement, it's time to figure out if you're financially ready. You'll need to consider all your costs for retirement, including the necessities of healthcare and long-term care as well as the fun things like traveling and dining out. To plan for this, it's helpful to figure out how much you'll need to live on each year and how you'll be able to use Social Security to the best of its ability. 

Debt-Free

If you have too much debt while you're making money, then it can be deadly when you're living in retirement and aren't actively making money. To avoid this, consider managing or reducing your debt level before retiring so that your finances are in better shape. This will make it easier to deal with any unexpected expenses that may come up during retirement.

Budget Planning

Another way to secure your retirement future is by creating a retirement budget. This happens before you actually retire. Your financial advisor will help you outline your income and expenses for the next year or two. Once you have a good understanding of your current financial situation, it's time to make some adjustments. You may find that you need to reduce your expenses or increase your income in order to be ready for retirement. Whatever the case may be, taking these steps will help ensure a smooth transition into retirement.

Just as we suggested assigning certain income to certain spending, you can do the same for the rest of your expenses in your retirement plan. For example, your basic living expenses from groceries to utilities may be covered by your Social Security benefits. Then, the last step in your retirement planning should be listing your legacy assets, or what you want to leave behind for heirs, family members, and friends or organizations. 

Planning for the Pitfalls

Retirement is a time when you can finally relax and enjoy your life. However, it's important to make sure you're prepared for this time in your life. Here are some common mistakes to avoid when preparing for retirement:

  1. Not saving enough money. If you don't have a retirement plan in place, you'll likely need to rely on Social Security or a pension to provide income during your retirement years. Make sure you're saving as much as possible each month so that you have enough money available when the time comes.
  2. Not planning for expenses. When planning for retirement, be sure to include costs like healthcare, travel, and groceries into your budgeting equation. You may also want to consider investing in a life insurance policy to protect your family in case of an unexpected death.
  3. Not updating your investment portfolio. It's important to make sure your investments are updated as you approach retirement so that you're able to retire with as much money as possible. This means adjusting your investment strategy based on current market conditions.
  4. Not planning for a disability or death in the family. If you have a spouse or children who will be financially dependent on you during your retirement years, be sure to include provisions for disability and death in your budgeting plan. This way, you'll know exactly how much money is available should something unexpected happen.

If you're interested in learning more about why certain mistakes may even be dangerous, be sure to connect with our team today.