For an enjoyable retirement, it’s vital that you plan ahead. Raymond James advisors can assist with understanding your retirement goals and creating an ideal savings strategy to help achieve them.
Idealy, saving should begin early in your career via retirement accounts that offer tax advantages. Furthermore, learning about investing can help ensure your funds can continue growing with compound interest and investment returns.
Determine Your Goals
Establishing your goals for retirement planning is the first step toward financial security. Goals serve as motivation to take steps toward your financial dreams when other avenues may fail you; more specific and clear your goals are, the more likely you are to achieve success.
First, envision your perfect retirement life, including activities that bring you joy and satisfaction – such as volunteering, traveling, or spending time with loved ones. Doing this will enable you to determine how much money may be necessary in retirement and create a budget and estimate expenses more accurately.
Your retirement planning must also take into account other variables, including when and how you want to retire; your expected pension and Social Security benefits; as well as an appropriate withdrawal strategy. Strive to strike a balance between protecting your savings while living comfortably during retirement – many financial experts advise taking out no more than 4% each year so your nest egg lasts as long as possible.
As part of your next steps, calculate your current savings, existing debts and expected retirement costs in order to assess whether you are on track with meeting your goals. This can help determine whether it’s necessary for you to increase contributions, switch your investment strategies or work longer if needed. Keeping in mind that investments may rise and fall, diversifying your portfolio by including stocks, bonds and mutual or exchange-traded funds (ETFs) could reduce risk significantly and allow for potential profit opportunities.
Establish a Budget
Once your goals are clear, the next step in budgeting should be analyzing your spending habits to calculate average monthly expenses and anticipated inflation costs. Be sure to account for essential, discretionary and one-off expenditures along with potential inflation costs when creating your budget. Also remember to account for anticipated income sources like Social Security benefits, pension distributions, rental properties or any part-time work planned during retirement.
Your essential expenses in retirement should remain relatively consistent with those in life before retirement, such as housing, utilities, insurance premiums and food costs. Healthcare costs should also be factored in; while most will come through insurance plans, out-of-pocket costs and prescription drugs need to be factored in.
Final step will be estimating taxes at all levels – federal, state and local – along with property and sales taxes that may increase or decrease depending on where you reside.
Reducing retirement expenses involves several strategies, such as downsizing your home, cancelling subscriptions that no longer suit you and cooking more meals at home instead of dining out. It is important to remember, though, that many retirees end up spending more than anticipated in their early stages due to activities like travel, volunteering and hobbies filling their free time – therefore making constant monitoring and adjustments of budget necessary in order to accommodate changing lifestyle habits.
Set a Savings Goal
Setting savings goals helps keep you on track during times of market instability and when faced with difficult decisions about investing or withdrawing. Your savings goal also acts as a guidepost that guides financial sacrifices necessary for an enjoyable retirement.
Estimating what expenses will be in retirement is key in order to properly save for it, as this is the primary driver of how much money is necessary. Expert advice suggests saving 70% to 80% of pre-retirement income with some expenses likely remaining, such as housing or car costs.
Starting early can help your retirement savings grow rapidly – time can act like fuel to accelerate this growth! Starting saving early in your 20s or 30s could result in significantly more savings at retirement age than starting later on in life.
Consider what kind of lifestyle you would like for retirement and if reducing spending is acceptable. This may result in different savings strategies – for instance saving more or working longer (if applicable). Setting goals that reflect what matters to you most can help ensure decisions made are aligned with these core beliefs.
Work with a Financial Advisor
If you feel confident in your financial management skills and can dedicate enough time to monitoring market trends, a professional advisor may not be necessary to create and map out a retirement plan for you. However, given the complexity of investments and retirement planning often necessitating expert assistance can save costly mistakes from derailing savings growth and derail retirement savings plans.
Financial advisors offer access to sophisticated investment and retirement planning tools, stay abreast of tax laws and market trends to provide impartial advice tailored specifically for you and your situation. They can assist with creating a retirement savings strategy based on income, expenses and estimated cost of living so that you’re well equipped for retirement.
As you approach retirement, they can also assist with complex decisions like when and how to claim Social Security as well as structuring withdrawals from various accounts in order to minimize taxes. They may even help with long-term care insurance purchases as well as offering advice regarding donor advised funds (DAF) that allow donors to gain tax advantages by giving to charity.
Be prepared when meeting with an advisor to discuss your goals, objectives, investments, risk tolerance and any other pertinent details that could influence your plan. Being organized will make the meeting go more efficiently – bringing all relevant paperwork may make the experience smoother as well as having someone refer an advisor they work with and is satisfied with them as a source of referral.
