“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?
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?
It’s been a while since I’ve written about updating your retirement saving plans and plans for your post-work life. If you’ve been reading this blog for a while, you’re probably aware of the fact that I do this from time to time. This is another one of those reminders. As we move into the final quarter of 2019, now is a good time to sit down and review your retirement plans and any associated documents. Take the time to ensure that they still match your goals and desires as well as where your current life is at. This means checking beneficiaries and making sure they don’t need to be updated. It also means checking that you are saving enough to meet your goals. If you find you need to tweak things, then do so. It can be easy to set aside your retirement goals and plans after you set them and forget about them. While you don’t need to review your plans all the time and worry about them constantly, you should be checking them every few months to make sure they still match up with what you want to do in the future. You may also find that life events over the past few months–or year–may have changed your plans for the future. Again, this review period is a good time to update your plans to match up with your current life and goals. An added bonus with doing a retirement plan review at the end of the year as it can be refreshing to go into the new year with your plans set and goals ahead of you. If you find you need to tweak your retirement goals or need help with changing your plans, you should speak with a certified wealth manager or financial planner.
July 1 is as close to the midway point of the year as you can get. Six months have passed and six months are left to go. Therefore, it’s a good time to do a review of your retirement savings and plans–not only to make sure you are on track for your yearly goals, but to also make sure your overall retirement plans and goals are still achievable. You will also want to use this review time to make sure the paperwork for your retirement plans are in order. Are the beneficiaries correct? Do you want to contribute more? Will you nest egg, as is, allow you to meet your retirement goals and plans? Taking the time to review such information can save you–and your family–a headache in the future. And no, you do not need to do the review right away, but can do it in the coming weeks. What matters is that you take the time at some point to review your nest egg and retirement goals. If you need help with defining what you want retirement to be or want to make changes to your retirement plans, you should speak with a certified financial planner.
Worrying about what to do with excess money can seem like an odd thing to do, but it’s actually something that can cause a fair amount of stress. Deciding where to put that money isn’t always an easy decision, especially if you’ve already built up a substantial nest egg, have an investment portfolio, and already have an emergency fund going. The decision isn’t so much about which account needs it the most, but can be focused on what account is the most efficient use of your money or which option has the lowest tax implications. It all depends on what is most important to you and your needs. For some tax implications reign supreme, while others are more interested in dividends and growth. Once you decide what is most important to you, put your money there. Of course, you could also always just divide up the money among the multiple accounts you may own as that is always an option. Keep in mind too that the stress of extra money can exist before you even get the money, such as knowing that an inheritance from a parent or relative might be coming your way soon. The best way to avoid such stress is to formulate a plan for the money before you even get it. There’s nothing wrong with coming up with a plan for future excess cash and it can be a great way to keep concerns and worry to a minimum. As always, if you need help formulating plans, both for future and current excess money, you can always speak with a certified financial planner. A good financial planner will listen to your financial goals and desires and help to formulate a plan that you can easily follow.
There’s a really good chance that if you’re reading this blog than you probably have at least some money saved up for retirement. Having at least a couple thousand dollars saved up puts you well ahead of nearly half of all working-age Americans when it comes to saving for retirement. And depending on where you are age and career wise, this may or may not be something you need to fret over. If you are later in your career and are worrying about having a large enough nest egg, then you probably need to get into gear and do some serious saving work in the coming years. If you are young and just starting out in your career, then you probably aren’t too worried about your savings and whether you have enough. Regardless of where you are in your life or career, retirement can seem intimidating. The thought of having to potentially live off a fixed income and the numbers that get thrown around these days as potential goals (seven figures? Really!?!) can make retirement–and saving for it–seem daunting. However, you cannot let that get in the way of the work you need to do. Don’t let retirement seem so daunting that you feel like saving for it is a fruitless task. Yes, it will be tough and there will be times where you won’t be able to save as much as you’d like, but every little bit counts. Don’t be afraid of retirement even when it seems either so far away or way to close for comfort. If you need help in getting your retirement savings in line or want to design a plan that will allow you to efficiently and effectively save for retirement, you should reach out to a certified financial planner.
Is it planning? No. Is it good budgeting skills? Nope. Saving? Bingo! Yes, the most important part of retirement preparation is still saving. Yes, you can have the best financial plan and open multiple retirement accounts, but if you don’t save enough none of that matters. If you’ve been doing research on retirement saving, then you’re probably well aware that many Americans are not saving enough for retirement, especially those of younger generations. Now, there are various reasons why younger Americans are not saving enough, but there is no reason why older generations are not doing so. Saving should be your first priority when it comes to retirement. Your plans in retirement or your plans for your estate should take second fiddle to saving. Yes, it can be hard to save, especially if you have things such as a roof to put over your head or mouths to feed, but that’s where budgeting and discipline come in (along with a good plan for saving). If you want to beef up your retirement saving game or need help finding the motivation to save, then you may want to speak with a certified financial planner. Also, if you have the chance to encourage your children or grandchildren to start saving early for retirement, you should do so.
Do you know how much you will need to withdrawal from your nest egg each year in retirement to live the life you want? In other words, do you have a withdrawal plan? A withdrawal plan can be an important part of your retirement plan, especially once you get into retirement. It’s a way to guarantee that your retirement savings last and ensure that you don’t over-withdraw. There are a couple of well-known withdrawal plans out there already. One common plan is known as the 4% rule. With the 4%, you withdraw 4% of your nest egg during your first year of retirement and then adjust accordingly for inflation each year. It’s not that you withdrawal 4% of your nest egg each year, but rather that you adjust each withdrawal for inflation based on that first withdrawal. For example, if you have $1 million saved for retirement, if you follow the 4% rule you would take out $40,000 in the first year. The next year you adjust that $40,000 for inflation, which might come out to $40,800 and so on and so forth. Basically, each withdrawal is a little bigger than the next. The 4% plan is proven to work as there has been a fair amount of research done as to whether it is a viable option for most retirees. You can also create your own customized withdrawal plan if you have certain goals in retirement and know what your expenses will be in retirement. If you do create a custom withdrawal plan, you may want to involve a certified financial planner who can help make sure your math is right and ensure that your nest egg will lasted based on the numbers you want to use.
In recent years, you may have noticed your employer offering “financial wellness” services as part of their benefits package. These services are usually centered around retirement benefits, life insurance plans, and–more commonly among big companies–wealth management tools/resources. Financial wellness resources can include a number of offerings, including: retirement planning advice, financial planning services, debt management, and banking services (usually in the form of a credit union). You will most likely find that the bigger the employer, the more diverse the offerings. However, thanks to advancements in financial planning and modeling technology over the past decade, more and more employers are finding it feasible to offer financial wellness services, even if only on a limited basis. Furthermore, retirement advisory firms that service corporate clients are working these technologies into their services, which in turn is available to corporate clients and their employees. Now, some may be wary about involving employer resources in the managing of their finances, but that doesn’t mean you should write off such services. They can be very helpful, especially if you are working on a budget and don’t want to hire a certified financial planner or if you know what you want to do, but have a few questions. Most financial wellness offerings are not required and you can pick and choose what you want to use. Employers realize that they need to do more to help employees plan for the future and save for retirement and now they can. Does your employer offer financial wellness benefits and do you take advantage of them?
If you’re within a few years of your intended retirement date, you’re probably starting to convince yourself that you are ready for it. You probably talk to friends and family about how long you’ve worked or how you’ve saved enough–or just about enough–to no longer need a paycheck or how you’ve started looking forward to the day you retire. If you aren’t near retirement, perhaps you’ve heard an older family member or co-worker talk like that. While it’s true that one may be financially or professionally ready to retire, that does not mean that one is necessarily physically or mentally ready to retire. It’s not unheard of to find retirees going back into the workforce after a few months or years in retirement. Sometimes that may be for financial reasons, but it can also be out of boredom with retirement. Yes, people get bored with retirement. After all, there are only so many rounds of golf that can be played or so many hours that can be spent in the garden or so many trips to be had (just to name some common retirement activities). This is especially true for younger retirees who tend to be more active and healthy than older retirees. It’s also not uncommon for people to not realize that retirement boredom is a possibility until they actually retire. While there is nothing wrong with this, it does mean that they may have tapped into their nest egg and used money that they could have instead kept saved if they had planned better. This is why it’s important that you really make sure that you are ready for retirement. This means doing some self reflection and thinking about your plans for retirement. Is there a possibility you may get bored with retirement? Do you have definite plans regarding your retirement? Do you want to keep working, but if a different field or with more flexible hours? Are you unsure of what you really want to do with your retirement? Such questions and reflection can help guide you to make the choice regarding retirement that is right for you. Who knows, you may find that you really aren’t ready to retire and that you just need a change of scenery career-wise. On the flip side, you may realize that you really do have plans for retirement that don’t involve working and that retirement is the right move for you. Whatever you decide, just make the decision that you feel is best for your life.