Ask Dana! How to Plan for the Retirement You Deserve
If you’re already thinking about retirement (it’s never too soon!), you’re probably thinking about it in terms of the “end of” something. The satisfying end of a successful career. The ending of a busy routine. The final reward for a lifetime of work. However, while you may feel the urge to close the book on your career, retirement is simply a new chapter—a new beginning. And just as you’ve meticulously planned every career move, you’ll need to plan just as much for retirement—and that starts with having a clear vision for your post-career goals.
Focus on the Future
When it comes to retirement we may be tempted to focus on our free time, but that’s just one part of it. Whether you’re interested in traveling, seriously pursuing a hobby, spending more time with your loved ones, or simply looking forward to taking time to discover your post-career self, you’ll need to create a plan.
Planning begins when you start thinking about the big picture. Before diving into the details, get a high-level sense of what you want your retirement to look like and how you might achieve it:
- Determine who your retirement income will need to support—a partner, a grandchild, or other loved ones
- Take inventory of the lifestyle you have grown accustomed to
- Create realistic savings goals for yourself
- Find investment strategies that help you achieve those goals
As you know, determining where to start can be difficult, especially when some of the factors feel unknown or uncertain. For example, you may still have decades before you retire and that means your interests could change. Will you still be interested in cooking? Will you still want to live in the city or state you’ve been calling home? What hobbies will 65-year-old you be interested in picking up? What habits will 65-year-old you have dropped? Are there grandchildren in your future? It can feel daunting to plan for someone you might not even know yet; however, you can help that person by asking the right questions now. A financial advisor can help you determine the following:
- How much have you saved so far?
- How much will you earn before retiring?
- When should you start drawing from Social Security?
- How much will you need to sustain your desired lifestyle?
- How can you maximize investment returns while minimizing risk and tax burdens?
- How much will you need to cover medical expenses as you age?
- Do you have other sources of retirement income to draw from? What are they?
Again, these questions can be tricky, but the sooner you start planning, the easier they will be to answer. Trust us, your future self will appreciate your foresight.
It’s Never Too Late to Start
How to spend your time post-career might seem like a no-brainer. In fact, you’ve probably been thinking about what you’ll be doing or where you’ll be going for a long time. However, whether you’ve been planning to finally learn how to scuba dive or settle into a full-time grandparent role, you’ll need to financially plan for your free time regardless of what you choose to do with it. What you decide to do with your free time may change how you save for it.
It should come as no surprise, but the earlier you start saving, the better. However, life doesn’t always work out according to plan. Odds are you’ve even experienced some setbacks or surprises yourself. Luckily, it’s never too late to change your habits. Here are three ways you can start saving now:
- Help Your Money Make Money: You may be familiar with the proverb, “The best time to plant a tree was 20 years ago. The second-best time is now.” The same is true for putting money into your retirement fund. If you start saving today, you can rely on compound interest to help your money make money. Even if you haven’t been saving money before today, you can certainly start today, and it will make a difference.
- Take Advantage of Your 401(k): The easiest way to start saving is by taking advantage of your employer-sponsored 401(k) plan. Even if your company does not match your monthly contribution, it’s important to invest in it by taking a small amount out of each paycheck and setting it aside. When you set this money aside, that can make a big difference over time as your investments increase in value or accrue interest. If your company does not offer a 401(k) or if you are self-employed, you will want to contribute to an IRA. The best part about saving through a 401(k) or IRA is that you can essentially “set it and forget it” by automating your contributions. While a financial advisor would recommend you set aside 10% of your pre-tax income, you can start with as little as 1% and increase your contribution as you build wealth.
- Increase Your Income: Knowing your worth now can help you save for the life you want later. A simple way to increase your pay is to negotiate a raise or a better offer. You can also earn extra income through a “side hustle,” such as consulting or freelancing. All that extra income is savable income and can help increase your retirement fund.
If you’re like most people thinking about retirement, you think about what you want to do, not what you want to leave behind. However, deciding now on what kind of legacy you want to leave is the only way to ensure it will happen. Maybe you want to help pay for your grandchild’s college tuition or leave an inheritance to someone who’s made life special for you. Perhaps you’d like to gift your children their childhood home or set up an endowment fund for an organization that’s meant a lot to you. Whatever legacy you want to leave behind, it’s not something that just happens. It’s a decision you need to make and plan for to ensure the things you love are passed on the way you want them to be.
Working with a financial advisor now can help you get to where you want to be later. Digging into your retirement goals, exploring saving strategies, and discovering investment opportunities are all things that the right advisor can help you do.
Dana R. Mascalo, CFP®, RLP®, AAMS®, C(k)P®, is a Managing Partner with TrinityPoint Wealth, an independent SEC Registered Investment Advisory firm in Milford, CT and Charlotte, NC. Dana advises high net worth clients with complex needs and is sought after by individuals, families, business owners and executives all over CT and the United States. Acting as their personal CFO, Dana looks at a client’s entire financial life with a visionary lens, advising on investment portfolios, retirement planning, stock options, life transitions, exit planning for business owners, customized advanced cash-flow planning and multi-generational wealth transfer strategies.
Disclosure: This material is provided by TrinityPoint Wealth for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, however, TrinityPoint Wealth cannot guarantee the accuracy or completeness of such information. TrinityPoint Wealth does not provide tax or legal advice.