Are you planning on retiring in the next five to ten years? If so, you may want to consider some of the following retirement planning activities. Not everyone’s situation is the same so do not think that everything will apply to you, it may or it may not. But regardless of your situation, these are some good areas to focus on and consider when you are approaching retirement.
The first thing that most financial planners will agree on is the fact you need about ten times your salary saved before retirement. And that means whenever you retire or meet the full retirement age that you are eligible to get your full Social Security. For most of us that is age 67, so that is your target date to have the full ten times your salary saved in a retirement account. If you do not have that much save you will need to consider a few things before you do retire. One you can elect to save more to reach the target of ten times your salary or two you can delay your retirement age by a few years. You can also revisit how you are investing your retirement assets to get possibly them to work a little harder for you by not being too conservative in your investments.
While you are revisiting your savings, it may be time also to look at your investment policy statement or your investment plan. These is a vital document for anyone who is saving to have and to follow better yet. These are our roadmaps as to how we will invest, what we will invest in and how we will reallocate our investments and at what times. These documents keep us on track to reach our goals and help to keep out emotions out of our investments. The beginning of the year is a good time to always re-evaluate your plans and to make any necessary changes that they may need.
A financial plan will also assist you when many people are in panic mode. This occurs when the markets go south for whatever reason, and your instincts tell you to sell. This is not the time for people to be acting on their emotions but rather act based on what they have in their plans. Asset allocation should be the main component of your plan but when to rebalance should also be addressed in the plan. But it is never a good idea to rebalance based on emotion and not what you plan for in the written financial plan you have developed and revised over the years. But if you follow your plan and not let your emotions get in the way you will have more success than someone who does not have a financial plan to follow at all.
It is always a good idea to also check your psyche when you are investing. Let’s face it the markets are volatile at best. And without a financial plan, your psyche will run you ragged and drive you crazy. The markets are what they are, and they will do what they do. No matter how hard you try, you will not be able to predict their movements with much success. Since July of 2015, the markets have gone down over ten percent. No one saw that coming and no one saw the start of 2016 being as bad as it was. But again, the markets will do what they will do not matter what. No one can predict how they will act or what they will do. But if you have a financial plan that will dictate how and what you will do when the markets make any wild moves.
Evaluate your position on a regular basis so you know where you stand I regard to your retirement plan. See what kind of loss you can absorb before you need to do some major tweaks to your portfolio. Chances are you can catch them before they become major obstacles and derail your retirement plans. Always know where you stand in regards to your retirement.
And finally, you always need a plan B. Think of this as a break in case of an emergency. It is something that we hope we will never need but will have in place just in case it is needed. A plan B is especially important in the event you have not saved enough to retire properly. Consider alternate ways to obtain cash rather than selling your depreciated assets to fund retirement needs.
Retirement is not a myth but rather the end of a wonderful working career. With proper planning, you can enjoy a rich retirement and one that you deserve. The key is to plan properly for your retirement and not live beyond your means.
If you have any questions or need any additional information, feel free to contact me.