5 keys to successful retirement planning
Retirement planning can feel overwhelming especially if you’re balancing multiple financial obligations and concerns. Many financial experts focus on starting young, staying consistent and keeping the long-term view in mind. These are all great and accurate advice; however, what if you’re nearing retirement age, life is life-ing and your unsure if retirement is possible?
I’ve connected with thousands of people over the course of my career and more often than not, I get the question “Can I retire”? These five keys are meant to help you gauge where you are and assist you with starting/continuing your journey to retirement.
Prioritization: What’s most important to you as you transition into retirement? This answer varies from person to person so it’s important to be honest with yourself.
Clarify Your Goals: Identify what matters most to you in retirement—whether it’s travel, a certain lifestyle, or simply having peace of mind. This clarity will guide your financial decisions and planning.
Align Values and Finances: Make sure your financial plan reflects your personal values and priorities. This alignment helps ensure that you’re not just saving for the sake of saving but working toward a life you truly want.
Dollarize your lifestyle: It is imperative to have a vision for your life in retirement and to dollarize it with projections of the costs to live the lifestyle you desire. This gives you an idea of how much money is required for your day to day. When you have a clear vision on how much money is needed for your daily living in retirement, it allows for more space to plan for the unexpected.
Estimate Retirement Costs: Calculate how much money you’ll need to maintain your desired lifestyle. This includes regular expenses, occasional costs, and any unexpected emergencies.
Inflation and Health Care: Factor in inflation and potential healthcare costs, as these can significantly impact your financial needs.
Cash Flow Analysis: Having a clear understanding of your cash flow vs expenses is foundational to retirement planning.
Track Current Expenses: Start by analyzing your current spending to understand your financial habits and identify areas for adjustment.
Create a Retirement Budget: Develop a budget based on your estimated retirement expenses. This should include necessary adjustments for changes in income, lifestyle, and health care.
Organization: Understanding where your assets are is key to managing your financial health. Which institutions are your accounts located at and what type of accounts do you have? Additionally, knowing how your money is working for you is critical — is your money in cash, fixed income, investments, real estate, your business, etc.?
Review Your Accounts: Make sure you have a clear understanding of where your money is invested and how it’s allocated. Consider consolidating accounts to simplify management.
Diversify Investments: Ensure your investments are diversified to manage risk and optimize growth. Review your asset allocation based on your risk tolerance and retirement timeline.
Transparency: Everyone doesn’t need to know your personal business; however, it’s crucial to strike a balance between privacy and transparency, especially when it comes to financial matters. While it's important to maintain personal boundaries, being open with those who are directly affected by your financial decisions—like family members or business partners—can help build trust and ensure everyone is on the same page.
Communicate with Your Spouse: Ensure that you and your spouse have a shared understanding of your financial situation and retirement goals.
Discuss with Family: If applicable, have conversations with children or other dependents about financial boundaries and expectations. This can help manage their expectations and prepare them for future financial planning.
Plan for Dependents: Include considerations for aging parents or dependents with special needs in your retirement planning. Ensure you have a plan for their financial support if necessary.
Consult a Financial Advisor: I am a licensed financial planner with the ability to provide personalized advice and help you navigate complex financial decisions. Schedule your complementary consultation to continue preparing for your transition into retirement. .
