Will you have enough money to last you through retirement? With the average life expectancy at 78.7 years old and data suggesting around half of Americans currently in their mid-50s are expected to live to be 90 years old, your retirement money will need to stretch further than the generation before you. Have you started planning? It's never too early to start; the sooner you start, the better off you'll be come retirement.
Every life stage has its own action steps you should take to meet your goals for retirement.
Stage 1: Just Starting Out
You've just landed your first "adult" job and they tell you they offer matching in their 401(k) plan and...you have no idea what that means. When you're just starting out, it's all unfamiliar and can be overwhelming. The best part about this stage is that it's the first one and you have the benefit of time on your side. In this early stage, it's easy to let time slip by without planning for retirement because it seems so far down the road that you don't have to worry about it yet. Don't let your best asset, time, get away from you.
Your Action Step is: Learn to invest and save
Now is the perfect time to soak up as much knowledge as you can about properly investing and saving your money. You don't have to immediately become an investment expert; start learning the basics and go from there as you get more comfortable with the concepts. Get money-saving tips and start an emergency fund so you don't fall into debt if an emergency arises. Learn about what benefits your employer provides and take full advantage of it - your future self will thank you. The theme of this stage is "learn and apply."
Stage 2: Getting Established
You're moving up the ladder and making more money. Great! However, it all seems to be going as quickly as it's coming because of increased responsibilities and priorities: a mortgage, childcare, etc. It may seem like you are constantly struggling and spinning your financial wheels. But it's not all doom and gloom - there is light at the end of this tunnel and it comes by completing the action step.
Your Action Step is: Get a clear financial picture and prioritize
Picture what you want your retirement to look like and reverse engineer it. Once you get a clear picture of your retirement, you can start identifying how to fund it. This involves prioritizing your priorities. By analyzing where you are spending, saving, and investing, you can start making the changes you need in order to ensure your retirement is fully funded. The added benefit is that you will feel less stressed because you will have a better handle on your finances and knowledge that you are securing the future you want. If you do not already have a team of trusted legal and financial advisors, you should build one and consult with them. Their insight can help you align your finances with your goals, guide you through the choices you will be making and ensure you plan for contingencies that may arise, such as taking care of aging parents.
Stage 3: Retirement is in Sight
You've worked hard and are finally starting to think about retiring. This is a critical stage where important decisions are made and the question of when you can retire is hanging over your head.
Your Action Step is: Evaluate where you are and create a timeline for retirement
By consulting with your team of advisors you will be able to assess how much longer you will need to work. This is a stage involving major healthcare, tax, and estate planning decisions and is not to be taken lightly. Taking careful consideration at this stage can save you a great deal of money, ensure you retire when and how you deserve, and create the legacy you want to leave behind. Your team is here to help you make the transition from working to retirement; meet with them and discuss all of your options and make sure you retire not just in style, but in your style.
Stage 4: I'm Retired, Now What?
You've looked forward to retirement for so long, but now that it's here it takes some adjusting, both mentally and financially. Your M.O. has been "work and save" for so long that it might be unclear how to adjust to this new life and way of thinking about money.
Your Action Step is: Move from "saving mode" to "distribution mode"
It's time to monetize all that money you saved up and learn your distribution options. There are tax implications for the options that you will need to know about in order to make good financial decisions. If you're already starting to feel restless and want to keep working in some capacity, get advice from your advisors about how to go about keeping busy while maintaining your retirement benefits.
Stage 5: Establishing Your Legacy
You've been retired for a while and instead of thinking about your future you're thinking about your legacy. It's a powerful concept, one that Sundvick Legacy Center believes should be at the core of your wealth and estate planning.
Your Action Step is: Review and update your estate planning documents
What type of legacy do you want to leave behind? Now is the time to sit down with your estate planning attorney to review your estate plan and make sure it is updated to your current wishes. Your attorney will be able to explain your options for wealth transfer and charitable contributions.
By following the steps above and having a dedicated team of advisors to guide you along the way, you can set and meet goals to secure the financial health of you and your family throughout your working life and into retirement. If you're already a few life stages in and feel like you haven't done enough, don't worry; Sundvick Legacy Center excels in guiding our clients through the often confusing maze of life, financial and legal decisions necessary to create plans that ensure they meet their financial goals and secure the well-being of their families.
Only by embracing the significance of your life choices today can you ensure you live your life and leave your legacy by design, not by default.
To schedule a consultation and get started on the road to the retirement you deserve, click here.
Northern Trust, "Retirement Planning for Every Life Stage" by Warren Arnold, Garrett Buchanan, & Nat W. Sanit