Planning for retirement successfully
Planning for retirement can sound scary, but it doesn’t have to be! At Milestone Wealth Management, we specialize in helping you look forward to a successful retirement. Flourishing in retirement takes planning, saving, and investing, but the rewards include confidence and enjoyment of your senior years. In this post, we’re going to cover some of the basics of how you can get on target to thrive in your retirement years.
No matter your age, you can get on track to saving for retirement. Whether you are 25 or 50, it’s important to think about your post-working years. However, the earlier you start, the better off you will be!
What are YOUR retirement plans?
As you begin to ponder retirement, it’s important to think about the kind of lifestyle you will want to live. From there, you can decide how much you need to save, and how to do so in the amount of time you have. Here are some questions you’ll want to ask yourself as you envision and plan:
- What do I want to do in retirement? Will I travel the country in an RV? Spend lots of time with my grandkids? Join a golf league? See the world? Go lake fishing every day?
- At what age do I want to retire?
- How much money will I need to save to support myself and my hobbies in retirement?
- How much do I need to invest each month to hit that financial goal?
- What retirement accounts should I be investing in?
- How should I plan for medical expenses or long-term care in retirement?
Be realistic about your spending habits
Next, you’ll need to form a good idea of how much money you will need in your retirement years. Determining realistic spending habits will protect you from running out of cash in retirement.
Many people think that when they’re retired, they will only be spending 70%-80% of what they spent during their working years. However, this is often not the case. There are a few factors that often increase retirement expenses more than you may expect. For example, whether or not your mortgage is paid off, unforeseen medical expenses, and the experiences you plan to have in retirement may cause your living expenses to be higher than you initially planned.
Also, keep in mind that since you will no longer be working for 8 hours every day, you will have much more time on your hands in retirement. Extra time can often lead to increased spending. Many retirees enjoy splurging on travel or other experiences. In addition, don’t forget that the cost of living is increasing—especially health care prices.
It may sounds discouraging to realize that realistic spending habits in retirement may be more than you originally thought. But take heart! As long as you plan well, you will do just fine. Down the road, you’ll be very glad that you planned accordingly and saved an ample amount of money. It will be much better to think carefully now and to save adequately than to find out in the middle of retirement that your planning was off and you’re out of cash.
Investing for retirement
There are many ways to invest for retirement. Because the options are so diverse, and the stakes are high, we highly recommend working with a financial planner. You only get one shot at retirement, and a financial planner can help you make a plan that you can feel confident about.
Most experts recommend investing 10%-15% of your income for retirement. If your employer offers a 401(k) match, invest up to that match. Roth IRAs are also a fantastic way to invest your money for retirement.
For stocks and bonds, consider your age and your ability to wait it out if the stock market’s not doing as well as you’d like. If you are younger, you’ll want to consider investing more in stocks rather than bonds. Stocks are riskier investments, but over time (10+ years), stocks outperform bonds.
If you’re older, you’ll need more securities. Bonds are less volatile and offer less risk. However, you will also see less returns with your bonds.
No matter how you invest, have patience! Investing takes time. Avoid being impulsive with your investments. If the stock market has a bad day, it doesn’t necessarily mean that you should pull all of your money out of it.
How can we help you?
Whether you’re in your twenties and just starting to think about retirement investing, or you’re hoping to retire in the next five years, we want to help you transition gracefully from your earning years to your spending years, without giving up the lifestyle and activities you enjoy. Over the last 25 years, Milestone Wealth Management has helped over 300 individuals and families avoid blind spots and create a comprehensive, confident plan for retirement. We want to learn about your unique situation, and create a plan that will work for you. Contact Milestone Wealth Management today to set up a meeting, and get on the right track for your retirement.