No one should have to worry about outliving their money, but plenty of people do. According to a 2015 survey by CreditCards.com, 40 percent of Americans, at least occasionally lose sleep worrying about whether or not they are saving enough for retirement. That figure goes up to 50 percent for people age 50-64, who are nearer to retirement.
“Stop procrastinating and start saving” may sound like a lecture about financial responsibility from your father, but we’re not here to give you a tongue-lashing about not saving enough for retirement. We’re here to help you get on the right track and save the money you need so you can live comfortably for the rest of your life.
The Big Disconnect
Knowing that you need to save is one thing, but planning, and actually saving for retirement is another matter. According to a recent study from Voya, 92 percent of workers believe it is “extremely important” or “very important” to start saving for retirement as soon as possible. At the same time, only 17 percent of the respondents said they had a formal written financial plan and just 31 percent had a written budget. The disconnect between knowing that you have a problem and doing something about the problem points out that people may procrastinate about retirement and prioritize their available funds in less than ideal ways.
Where Do You Stand Today?
While we see clients of all ages and backgrounds, most of our clients already have a certain level of financial sophistication. They usually have a 3-6 month emergency fund to cover the unexpected expenses that pop up in life. Most have some type of retirement account, either through their employer or perhaps in a Roth IRA. All of that is great, but it may not be enough. We look at our clients’ financial standing today and see how it can be improved to meet their short-term and long-term goals, reviewing items such as:
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Asset allocation
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Savings rate
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Spending habits
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Lifestyle in retirement
The Importance of Getting an Early Start
It makes perfect sense that having more time to reach a goal increases the probability that you will reach that goal. Most people have heard about the power of compounding and know that the longer your money has to work, the more it can grow. Your retirement money should be spread out over different types of investments based on your age and tolerance for risk. Your financial advisor can provide specific advice based on your age, current financial situation and retirement goals.
Setting Up for Retirement
Living into your 90s would be a blessing, but it would not be as good of a blessing if you ran out of money when you turned 80. Taking some steps today can help assure that you will not outlive your money. These steps include but are not limited to:
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Contribute the maximum amount allowed into your retirement plan
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Accelerate your savings rate, especially in your prime working years
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Downsize to a smaller house and put your savings toward retirement
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Make sure you have the insurance you need
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Pay off debt
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Pay off your mortgage
Our job is to help you plan for the expected and be prepared for the unexpected. Take control of your financial life so you will live well in your golden years by getting your financial check-up with one of our well qualified wealth advisors.