Many financial advisors and wealth managers encourage their clients to have goals when it comes to retirement. Of course, that can mean different strokes to different folks. For example, one person may have a goal of saving a certain amount of money for retirement. Another person may want to save up to buy a retirement home in a warm weather locale. Another may want to have enough saved up to take a big trip every year. Whatever it is, it’s good to set a goal to work towards. However, the road to retirement can be long and along the way things can change. Layoffs happen. Unexpected bills occur. Having children and a family can add some costs along the path to your post-working life. Thus, those retirement goals and benchmarks you set out with can change. And you know what? There’s nothing wrong with that. In fact, it’s a good thing to reassess your retirement goals every so often. Maybe living far away from children and grandchildren doesn’t sound so appetizing. Or maybe you realize that you’re saving more than you anticipated and have a little more freedom with retirement to get a little more fancy with your goals. Or maybe you realize you need to save more. Whatever you find, don’t be afraid to change your retirement goals and use those new goals and benchmarks moving forward. If you need help with your current goals or want to make a change, don’t be afraid to speak with a certified financial planner or wealth manager to get some advice.
“Change is the only constant.” You’ve probably heard this expression before. I believe it is sometimes attributed to the Greek philosopher Heraclitus, but it gets used often as a business mantra or by people who are seemingly always in motion. It’s also a reminder that despite our best efforts at times, change happens. I’ll admit, change can be scary, but it can also be a wonderful thing. It can force us to reflect on where we are and where we want to go. It can also provide us with an opportunity to try new things and make decisions that we have been putting off. For example, changes in the markets can force you to re-evaluate your investments and portfolio (did you really think I wasn’t going to tie this back to investing or retirement planning some way? lol.). That can be a really good thing. Markets are prone to change as companies come and go and stocks trend up and down. As such, you will need to buy and sell investments from time to time, especially if you are investing for the long-term. Same goes for your retirement planning. Over time, your benchmarks and goals will change and you will need to act accordingly. Yes, it can be a bit scary to think about having to pivot your retirement saving plan, but it can also be exciting. It can be refreshing to have a new interest or goal that fits with what you want more than what you currently have. It really all depends on how you look at it. Change can be a wonderful thing, are you ready for it when it eventually comes?
This Coronavirus pandemic is changing everything. Sure, you can tell yourself it’s only temporary and convince yourself that things will soon return to normal, but it’s highly unlikely that will happen (however, there’s nothing wrong with a little optimism!). For those of you Boomers out there getting ready for retirement, it will be different. First off, of course, is the fact that the economy and markets seem to have taken a turn. Yes, we are in a recession. That’s usually not a good thing, especially if you are planning on your portfolio or investments to keep making you money in retirement. On the flip side, if you are savvy with investing, this may be a chance to set your portfolio for when the markets rebound (not sure of when, though). This down market may lead to slower nest egg growth for Boomers who are still working and starting to think about retirement. This may lead Boomers to work longer, which may be more difficult than intended. It’s not uncommon for Boomers to be the ones forced out in favor of younger workers at companies when times get tough. On top of finances, you goals and desires for retirement may change as well during these times. Luxurious vacations may not be a thing to a while (particularly cruises) and many retirees may place more emphasis on spending time with family. You may even already find yourself re-assessing your retirement needs and desires as you read this. There’s nothing wrong with that. Just remember, that the vision and expectations of retirement change from generation to generation and it’s currently changing for the Boomer generation. Are you ready for the new retirement?
I’ve talked about it from time to time over the past few months, but now that there are only a few short days left in 2019, it’s a good time to review your retirement savings accounts. Over the past year: Where you able to save as much as you wanted to or intended to? Did your beneficiaries change? Did you open any new accounts? Did things change personally or professionally that would impact your retirement savings? These are important questions that you should be asking yourself at least once or twice a year. Regardless, the end of the year is a good time to think about whether you need to make changes to your retirement accounts or plans. You don’t need to act on changes right away, but if you find you need to make a change to, for example, a beneficiary form, you should do that in the first few weeks of the new year. The end of the year is also a good time to think about any changes that may be coming your way over the next 365 days. Will there be a major life change? Will you be retiring in 2020? If you answered yes to either of those questions, then you will definitely need to reconfigure the information associated with your retirement accounts as well as your retirement plans and goals. Furthermore, these changes might be big, so they may require some lengthy conversations with you and your financial planner or wealth manager. So, what might 2020 have in store for your retirement plans or savings?
Regardless of the outcomes of yesterday’s elections, it appears that Congress could be poised to expand retirement options in the near future. The Retirement Enhancement and Savings Act (RESA), which appears to have bipartisan support, could expand retirement plan access for many workers as well as allow more employers to offer such plans. The biggest selling point of the legislation is that it will allow small businesses to band together–pooling resources and increasing buying power–and offer multi-employer retirement plans (MEPs) to employees similar to those offered by larger businesses and corporations. This can be an enticing offer for small businesses and could be a recruiting and hiring advantage in the future for them. While MEPs are currently available for some small business, RESA would do away with some of the current restrictions, making it easier for small employers to band together. RESA also looks to repeal the prohibition on workers over 70 1/2 making contributions to IRAs. This could be an advantage for younger generations who may have to work longer–but will also live longer–to save enough for retirement in the future. As with any legislation, there’s always the possibility that it could hit a snag somewhere in the process, but for now, it looks like it has a good chance of passing with support from both sides of the aisle. If you are looking to make some changes to your retirement plans or are an employer interested in offering more retirement benefits to your employees, you may want to pay attention to RESA and brush up on what it offers.
President Trump is expected to sign an executive order today that will direct the Treasury to review the rules on required minimums distributions (RMDs). The initiative directs the Treasury Department to review the rules regarding whether investors can keep more money in 401(k)s and IRAs for longer periods of time, most likely beyond the account owner turns 70½. If changes are made, they could allow for retirees to have more control over when they are required to begin taking money out of their retirement accounts. The executive order also focuses on small businesses and their ability to offer retirement savings plans to employees. The initiative would direct the Treasury and Labor Departments to work together to issue potential regulations that could make it cost-effective and efficient for small businesses to band together and offer retirement plans to their employees. While this executive order doesn’t necessarily mean that new rules or changes will definitely come about, it does mean that there could be some changes regarding what types of plans employers offer and how much time you have to allow your nest egg to grow. Stay tuned!
There is no such thing as a “set it and forget it” investment strategy. As much as people would like the ease of being able to pick just one investment strategy and never have to worry about it again, that’s just not how it happens. As knowledge of the markets evolve–with the help of technology–so to do investment strategies. What was a common trend even just ten years ago may be outdated or proven to be ineffective now. Furthermore, you need investment strategies that fit your life and goals and those are things that will also change and evolve over time. The investment strategy you take in your 20s most likely won’t fit your your lifestyle or goals in your 40s or 50s. So, don’t be afraid to change your investment strategy from time to time. You may want to do so after major life events (i.e. marriage, birth of a child, retirement, etc.). If you have questions about whether you need–or should–change your investment strategy, you should also speak with a certified financial planner to make sure that any investments strategies you change to will allow you to meet your retirement and financial goals.
There are a lot of choices involved with retirement planning. From where to save to how much to save, retirement can seem like choice after choice. But today we are going to talk a bit about when retirement isn’t a choice. Yes, that happens and it’s not uncommon. Companies change, injuries happen, life takes sudden turns. While there isn’t much you can do to plan for an unexpected retirement–after all, it’s unexpected–you can take steps to realize just how you would handle such a situation and have a plan that is ready to be put into place should you suddenly find yourself facing retirement without a choice in the matter. I want to state, however, that this doesn’t mean you should abandon your retirement saving plans and goals. What it does mean is that you may want to consider scenarios where you have to retire sooner than expected and consider how you will handle them. Running through these situations and having an idea as to where the money you will need to live off of will come from as well as how you will make it last can be a good exercise in preparation, even if it never actually happens. You may also want to consider what you will do with your new found freedom and the extra time on your hands. As part of this process, you may even want to talk with a certified financial planner about such a situation as they may have advice or tips for handling an expected or unplanned retirement. You most likely won’t know if you will be forced to retire, but that doesn’t mean you should be ready for it.
If you aren’t well-versed in investing or don’t really care enough about the markets to watch them all day long, you probably want an easy way to invest your retirement savings without having to do much work. Luckily, many employer-based retirement plans are designed to make your retirement contributions and investments automatic, so you won’t have to do much thinking when it comes to investing. However, just because everything is automated doesn’t mean you have to completely ignore it. In fact, you should be checking your retirement account monthly (or at least a number of times throughout the year) and you should make adjustments for when your situation in life changes. Did you just start a family? You may want to make a retirement adjustment. Did you get divorced? Again, might want to make a retirement adjustment. Start a new job? Another retirement adjustment might be necessary. You don’t need to make changes to your retirement plans or savings with every little life change, but you might want to use those moments to review where you are at. You may just want to make a change anyways or you might notice that your investments have grown stale or stagnant since you first started. Taking the time to review your retirement plans every so often and to make make tweaks and adjustments as necessary can be refreshing for your portfolio as well as your perspectives on retirement. When was the last time you looked at your retirement investment portfolio?
We don’t always get the chance to retire when we want to. Sometimes a person might be forced into an early retirement while another person may find that they aren’t quite ready–financially or otherwise–and thus, will need to work a bit longer than anticipated. Working an extra few years (or even an extra few months) can work wonders for your nest egg and help increase it’s value. Furthermore, the last years of your career tend to be the highest-earning years, which provides a chance to play catch-up with your retirement savings, especially when it comes to contributions. However, unexpected life changing events can alter your savings and your retirement plans. You may find yourself in a situation in which you may need to retire early or work longer. While there is nothing wrong with setting a retirement date, you should also be flexible with it, especially if you are more than ten years out from retirement. Using a retirement date as a goal or benchmark in retirement planning is a good idea, but you also need to be real and realize that it may change. So, when do you want to retire?