If you’ve ever talked to a good retirement financial planner, you’ll know this already. A good one will have helped you take the steps. But many families fumble along. And what a shock that can turn out to be. So you may be reading this for any of several reasons – you are already retired and just checking in on financial planning; you are ready to retire soon and want to know more about financial planning for retirement; or you’re planning ahead (or planning on planning); or perhaps helping with elderly problems of a loved one.
So…do you really feel like you’re on top of your finances?
Do you know your monthly budget? This is a financial planning “must.” Are you living within your budget or a bit on the concerned side? Do you even know where to start? Are you perhaps a bit in denial about the whole thing and prefer to just not think about it?
Then there may be the matter of finding a retirement planner — that is, a good one. Do you currently work with an advisor who you believe in and trust? If so, do you thoroughly know what they are talking about and doing with your money?
Retirement planning, as you are aware, can be very complex. There are so many vehicles that can be used, from investments, to savings, to different types of insurance, to annuities. And if you are a homeowner, you may quality for additional income from a reverse mortgage.
We recommend the services of a certified financial planner to help establish your financial goals and meet them. The purpose here is to help you plan The Plan. Or review the one you may already have in place, if necessary.
From Here to There
For retirement planning, you need a road map to get you to where you want to go. If you know it. But to get from here to there, you need to start with Here. If you know it.
Where Are You?
Do you really know where you are right now?
Have a good grip on the wheel and the road map all planned out? Sort of? Hate to ask for directions? Took a fork in the road that maybe didn’t work? Totally lost? Or in denial and don’t even want to think about it, but you know you’ve gotta? A road map is no good if you don’t know where Here, your starting point, really is. Which is a must for effective financial planning.
Once you know exactly how your Money In – Money Out comparison looks, then it’s time to assess. Are you OK, or do you need to tighten the belt?
Is saving even possible?
In thinking ahead for retirement planning, it is said one thing you should never cut down on is savings, if you possibly can. If you are still working, always pay yourself first out of every paycheck – make an eventual goal of 10%. Start out with whatever percentage you can, and make it consistent. Gradually build it up. Think you can’t afford it? Actually, what you can’t afford is not to. A good idea is to have it automatically deducted from your pay check, even if you must start small.
You may have heard that an important goal is to put away three to six months worth of monthly expenses as a cushion. Remember, this is not extra spending money. It is your emergency savings fund and should not be touched unless really necessary. This should be maintained as part of your basic financial planning.
Where is “There”?
Now that you know where Here is, where is There? Here are some questions you can ask yourself or your partner, to make your road map – your Plan. Think in terms of several areas – Financial, Health, Relationships, Recreation, Professional if applicable, Other. All of these areas will be affected by retirement planning. You already have an idea of what you need. But it’s equally important to ask yourself or partner, What do you really want? Be specific in these categories. Take the lid off your imagination. Do not let your old habits and thinking (your inner Dictator) “edit” out what you really want.
You’ve probably heard the old sayings…Shoot for the stars and you might hit the moon; or don’t shoot too low…you may get what you want. (That’s the point).
How to afford extra expenses during retirement
When you retire, it is necessary to find ways to either reduce expenses or increase your available money. If you are considering taking out a mortgage on your home to help you afford expenses during retirement, you may have concerns about the potential to default. After all, on a fixed income it may be easy to miss a payment. However, you may qualify for a reverse mortgage, which has no such default risks and does not require immediate repayment at all. When you apply for such a loan, a reverse mortgage calculator will be used to assess the value of your home and decide how much you can borrow. But it will be up to you how you use the money and when you repay it. In fact, you will not owe the balance back as long as you stay in the home. However, as the homeowner, you must prove you can maintain the home by paying taxes and other expenses to qualify for a reverse loan. The home can also be sold to recover the loan balance, if you leave the property without fully repaying the amount you owe.
If you are just beginning early retirement planning
Assess how much time you have as of now to accomplish your ultimate goal. Time must be factored into investment, just as with planning a trip. There are more, very technical questions involved in this, that a professional specializing retirement planning can assist you with.
So you’ve got your Here and your There. You’ve set some financial planning goals. You’ve got a good start on your road map. But what is the best vehicle to use? It depends on what stage of the trip you’re in, your retirement age, how far you have to go and how long you have. Again, you may need some professional retirement advice. Don’t let financial planning issues become serious problems in the future. And if they already are heading that way, get some professional advice.
I am amazed at how many people don’t even think about their retirement till it is to late to properly invest!! Just boggles my mind!
This is so important. My brother is 23 years old and has his retirement planned already. So proud. All young people need to think ahead.
Always plan ahead and seek professional advice