What will your life be like in retirement? Will you golf, travel, or perhaps spend time with family? These are the things many people consider when they think about retirement. Of course, retirement is the time to do what you love most and spend your time the way you want.
Unfortunately, there could be some roadblocks in the way of you turning your dream retirement into reality. Retirement is a major financial goal, and there are a number of planning mistakes that could leave you unprepared to fund your desired lifestyle.
Below are five obstacles to avoid while you prepare for retirement. By avoiding these roadblocks, you can improve your odds of achieving retirement success and living the kind of retirement you’ve always imagined.
Assuming you will have a short life expectancy.
Retirees are living longer than ever. However, many are still continuing to leave the workforce at the traditional retirement age of 65, or even earlier in some cases. It’s not uncommon for retirees today to live well into their late 80s, early 90s or even longer.
If you retire in your early to mid-60s, there’s a possibility that you could be retired for 30 years or more. It’s possible your retirement could last longer than the amount of time you’ve actually spent saving.
You can prepare for a long retirement by continuing to grow your money even after you retire and by maximizing your guaranteed income. Consider tools like annuities, which may offer growth potential along with income that’s guaranteed to last for life.
Forgetting about inflation.
It’s easy to overlook inflation as part of your planning. However, inflation is too important to ignore. Inflation is the gradual, incremental increase in the price of goods and services from year to year.
Inflation is usually modest, but even a modest level of annual inflation can have a big impact, especially if it’s compounded over a long period of time. You can plan for inflation by factoring it into your budget and developing a strategy that generates increasing retirement income.
Assuming Medicare will cover all health care costs.
Medicare is a valuable resource for retirees because it covers a broad range of medical expenses. It doesn’t cover everything, though. In fact, it only covers a portion of most services, and there are other services and treatments that aren’t covered at all.
Be sure to remember that you will likely face substantial out-of-pocket health care costs as you get older. You may have to pay for things like deductibles, premiums, copays and much more. Develop a funding strategy, perhaps one that includes a health savings account (HSA) or a supplemental Medicare policy.
Not looking for guaranteed* income opportunities.
Most retirees will have some source of guaranteed income in the form of Social Security. You may even be fortunate enough to have an employer pension. However, it’s very possible that your Social Security and pension benefits may not be enough to fund your lifestyle. In that case, you may have to fund any gaps with distributions from your savings, which may not be guaranteed for life.
However, you can use tools to increase your level of guaranteed lifetime income. Annuities offer a variety of ways in which you can convert a portion of your savings into a guaranteed income stream. Some may even offer growth potential and limited downside risk.
Failing to create a written retirement plan.
Nearly all of these roadblocks and more can be identified and avoided with solid planning. Take time to think about your ideal retirement, and then document the expenses that may come with your desired lifestyle. Also, map out your projected income and develop a strategy to overcome any potential savings gap. A detailed, comprehensive plan can help you stay on track.
Ready to overcome your retirement obstacles? Contact us today at Focus Financial Group. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
This material is provided by a third party, and sources believed to be reliable, however, accuracy cannot be guaranteed. The opinions set forth in this video are that of the person speaking in the video, not that of Stover, FFG, or TCM Securities, Inc
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John Stover is a Registered Representative of and offers securities through TCM Securities, Inc. members FINRA & SIPC
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