Retirement is a colossal life transition. One that many Americans fear and worry about throughout their lives, especially when they’re ill prepared to make the big change.
In order to be proactive, instead of just worrying about your senior years, you should be planning for retirement. Retirement income planning consists of creating a comprehensive plan that will help you to manage and maximize your various income streams. Doing so will not only put your fears at ease but will also help you to potentially meet your expenses and help maintain your lifestyle after you retire, while avoiding the risk of running out of money.
Start Planning for Retirement Early
It’s never too early to start planning for retirement, especially if your company does not offer a pension plan. The earlier you start planning, the better prepared you’ll be and the more money you’ll have put away. Ideally, you should start retirement planning in your 20s, when you start working, but if you’re well passed those early days, start designing and implementing your plan as soon as possible.
By planning ahead and having a retirement income strategy in the works as early as possible, you can avoid running out of money and being left without the adequate means required to support yourself.
Consider Where Your Money Will Be Coming From
Many Americans who are planning for retirement do not know where their income will be coming from. Knowing all of the available streams of income that you could potentially access is a critical step in ensuring that you have enough money to live comfortably after you retire.
You should be focusing on your projected cash flow using the whole toolkit. This includes your pension or 401(K) if you have one, your bank account savings, your dividends, interest and appreciation from your investment portfolio, Social Security, old life insurance, income annuities, and income from any part-time work you plan on doing to generate more income.
Your retirement planning should be multi-pronged—not just focused on one stream of income, such as Social Security. When you consider where your money will be coming from, you can start to set up extra, independent income sources early, before it’s too late.
Engage a Retirement Plan Consultant
Planning for retirement is a complex undertaking. A wide variety of factors need to be considered, such as inflation and rising healthcare costs. And frankly, the task is just too important to risk doing yourself if you do not have the necessary knowledge, experience, time, and expertise to ensure that you are adequately protecting yourself after retirement. Having the right advice, guidance, and recommendations of an advisor can make all of the difference in your planning.
When choosing a retirement plan consultant, ensure that the advisor you choose has the right credentials: an up-to-date financial planner certification or accredited investment fiduciary designation, a fee structure that has your best interest at heart (no commission) as well as strong references.
Your financial advisor will perform an initial retirement assessment, which will take into account your income, your expenses, as well as your desired lifestyle after retirement. Your advisor will also help you to determine whether or not your goals are attainable, will make recommendations for changes that need to be made to achieve your objectives, and determine how much money you need to add to your retirement nest egg each month.
While no retirement plan will be completely perfect as many variables come into play—such as stock market crashes and changing healthcare needs—you can ensure that you’re better prepared for your years in retirement by planning early, considering where your money will be coming from, and engaging a retirement plan consultant.