The unpredictability of financial markets can disrupt even the best-laid retirement plans. This Financial Literacy month, let's take some time to reflect on the importance of retirement planning with confidence amid financial turmoil.
Retirement should be about spending time with those you love, enjoying the perks of free time, and having the money you need to achieve all of your retirement goals and dreams. However, the last few years may have felt like that dream is being ripped away from you as we go through yet another rollercoaster in the financial world.
Unfortunately, retirees and those planning to retire soon are the people most threatened by high inflation and extremely rocky financial markets. Fortunately, planning ahead can go a long way toward helping you protect your retirement when market volatility and worry hits.
At Agemy Financial Strategies, we understand that retirement planning can be intimidating in 2023. To help you retire with confidence, we have compiled a series of retirement planning strategies for both newly retired individuals and those who wish to refine their current plans. This will help allow you to approach the retirement process with a brighter outlook.
Here’s what you need to know.
Define Your Retirement Goals
When it comes to retirement planning, defining your goals is a crucial first step. Retirement can mean different things to different people, so it's necessary to think about what you want your retirement to look like.
For some, it may involve traveling to new places, pursuing hobbies and new interests, or spending time with family and friends. Some people may choose to work during their retirement years, while others may have different plans. Whatever your plans are, it's crucial to have a clear comprehension of your goals for retirement.
Once you have a clear idea of your retirement goals, you can begin creating a plan to help you achieve them. This plan should take into account a variety of factors such as:
- Your current financial situation.
- Your expected retirement expenses.
- Your estimated retirement income.
- Other important considerations are inflation, taxes, and potential healthcare costs.
Planning for retirement is an essential component of financial literacy. When you define your retirement objectives and chart a course of action, you make significant strides toward accomplishing a successful retirement.
As the financial world evolves, we understand investing can be overwhelming. But it is an excellent source to help grow your money - and let it work for you in your golden years.
The primary objective of investing is to achieve high returns, but with higher returns come higher risks. In order to optimize your returns and minimize potential risks, it's crucial to diversify your investment portfolio. Your investment strategy should be determined by several factors, such as:
- Risk tolerance.
- Retirement goals.
By carefully considering these variables, you can determine the best investment strategy for your retirement savings. It's important to remember that investments are not one-size-fits-all, and what may work for one person may not work for another.
Around 60% of households in the U.S. own securities in investments on accounts such as IRAs, and employer-sponsored retirement plans. However, this percentage drops to a little over 30% when considering only taxable investments.
It's essential to take the time to research different investment options and consult with a Fiduciary Advisor if necessary to make informed investment decisions that align with your retirement goals.
Monitor Your Progress
Monitoring your retirement savings progress enables you to make necessary adjustments to your investment strategy, ensuring that you're on track to achieve your retirement goals. You should check your retirement savings at least once a year, and more frequently if you have made significant changes to your financial situation or investment strategy.
Regularly monitoring your retirement savings also helps you identify potential issues early on, such as unexpected expenses or market volatility. If you are aware of these issues, you can take proactive measures to tackle them, such as modifying your savings rate or rebalancing your portfolio.
Additionally, keeping tabs on your retirement savings progress can motivate you to stay on track and increase your savings rate if needed.
Factor in Emergencies
Life emergencies happen. And they happen a lot. We're not just talking about your car breaking down. A fender bender, an unexpected medical bill, a broken appliance, a loss of income, or even a damaged cell phone. Large or small, these unplanned expenses often feel like they hit at the worst times. By setting up a dedicated emergency fund, you can help protect yourself from chipping into your savings so you're able to recover quicker and get back on track towards reaching your larger savings goals.
Most experts believe you should have enough money in your emergency fund to cover at least 3 to 6 months' worth of living expenses. But it's not unwise to save more during times of uncertainty. Building up your emergency fund can help prepare you and set your mind at ease if the unexpected should occur.
Plan for Long-Term Care
If you've not planned correctly, perhaps one of the biggest financial setbacks to retirees is long-term care. 70% of us will need long-term care, and it's not cheap. An average room in an assisted living facility in 2023 will set you back around $5000 per month.
In 2023 without insurance, monthly long-term care costs could see you paying:
- $5,148 for a home health aide
- $1,690 for adult day care
- $4,500 for assisted living
- $7,908 for a semi-private room in a nursing home
- $9,034 for a private room in a nursing home
Medicare does not pay for most long-term care expenses because it is primarily designed to cover acute care services for short-term illnesses and injuries. To cover the cost of long-term care, many individuals opt for private long-term care insurance, Medicaid, or a combination of both.
With the likelihood of needing long-term care increasing with age, it's crucial to consider this aspect in your overall retirement plan. By taking a comprehensive approach to planning for healthcare costs, you can help ensure you have the resources necessary to pay for the level of care you may require in the future.
Consider Working with a Fiduciary Advisor
If you are worried about your road to retirement, working with a Fiduciary Advisor can provide invaluable guidance and expertise in retirement planning. A Fiduciary Advisor can help you develop a personalized retirement plan, optimize your investment strategy, and stay on track to achieve your goals.
At Agemy Financial Strategies we are committed to educating our clients on a range of financial matters, including retirement planning, legacy planning, wealth management, and even providing support during the transition to retirement. With over 30 years of experience in helping individuals reach retirement in a stress-free manner, our unwavering dedication to educating and serving our clients remains at the core of our mission.
If you're interested in learning more about our offerings, see here.
While it can be stressful to see headlines about threats to the value of your nest egg, a volatile market does not necessarily mean danger for your retirement plans.
At Agemy Financial Strategies, we believe that everyone deserves financial stability and freedom, especially during retirement. We're passionate about helping our clients achieve their retirement goals, and our commitment to providing resources and guidance is a testament to that.
Our financial guide to retirement planning is just one of the many tools we offer to help you take control of your finances and plan for the future. Don't wait any longer to start planning for your retirement.
Contact us today to learn more about how we can help you achieve financial security and peace of mind.