Knowledge is Power this Financial Literacy Month

Knowledge is Power this Financial Literacy Month

April 10, 2024

Understanding how to manage money effectively is fundamental on your road to retirement.

Retirement should be a time of joy spent with loved ones and enjoying the fruits of one's labor. However, retirees and soon-to-be retirees often feel vulnerable amidst rising inflation and unpredictable markets. Yet, with careful planning, you can protect your retirement from market turbulence and financial worries.

To empower you to retire with peace of mind, we've gathered retirement planning strategies for new retirees and those looking to fine-tune their plans. These insights will help you approach retirement with optimism. Here's what you need to know.

Map Out Your Retirement Dreams

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, retirement may involve traveling to new destinations, exploring hobbies and interests, or spending quality time with loved ones. Others may opt to continue working in some capacity during their retirement, while others may have different plans altogether. Whatever your aspirations, clearly understanding your retirement goals is essential.

Once you've identified your retirement objectives, you can start crafting a plan to achieve them. This plan should take into consideration various factors, including:

  • Your current financial situation.
  • Anticipated retirement expenses.
  • Projected retirement income.
  • Other factors, such as 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.

Enhance Your Investment Approach

The primary objective of investing is to achieve high returns, but with higher returns comes a higher level of risk. In order to help 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:

The goal of investing is when the value of your investments goes up, you can earn money on them. For example, a stock's price won't stay the same forever—ideally, the company grows and makes money, and it becomes more valuable overall. Historically, investments in assets like stocks, bonds, and real estate offer higher average returns than traditional savings accounts. While financial markets offer no certainties, investing opens doors to accelerated wealth accumulation, outpacing the growth achievable through saving alone.

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. Take the time to research different investment options, and if needed, seek advice from a fiduciary advisor to help ensure your investment decisions align with your retirement goals.

Have an Emergency Savings Fund

Life emergencies happen—and for some, they happen a lot. Large or small, these unplanned expenses often feel like they hit at the worst times. An Emergency Fund acts as a safety net, helping to provide the financial resources you need to navigate unforeseen circumstances - without jeopardizing your long-term financial goals or your hard-earned nest egg.

Adequate cash reserves allow you to make decisions without solely relying on fixed-income sources. You can maintain flexibility in your financial choices, whether pursuing a new opportunity, supporting a loved one, or embarking on a passion project. Cash savings help ensure you won't have to dip into or liquidate your investments, allowing your retirement portfolio to weather economic uncertainty.

By setting up a dedicated emergency fund, you can help protect yourself from chipping into your savings so you can recover quicker and get back on track towards reaching your larger savings goals.

Most professionals 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. In 2024, without insurance, monthly long-term care costs might include:

  • $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. Many individuals opt for private long-term care insurance, Medicaid, or a combination of both to cover the cost of long-term care. 

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 necessary resources to pay for the level of care you may require.

Track Your Progress & Stay Informed

Monitoring your progress offers valuable learning opportunities. Regularly checking your retirement savings helps you spot potential issues early, like unexpected expenses or market changes. This allows you to take proactive steps, like adjusting your savings rate or rebalancing your investments. Monitoring your progress also helps ensure you're moving closer to your retirement goals. Aim to review your retirement savings at least once a year and more frequently if your financial situation or investment strategy changes significantly.

Here are some tips to stay accountable during Financial Literacy Month:

  • Expand Your Learning: Explore financial blogs for insights into personal finance basics, investment strategies, and financial planning beyond traditional books and workshops.
  • Stay Informed: Follow trusted financial news podcasts to stay updated on economic trends and tools. Continuous learning helps you adapt to evolving financial landscapes.

Consider Working With a Fiduciary Advisor

Financial literacy is key to making smart financial choices, and a fiduciary advisor can be a valuable ally in helping you confidently navigate a complex financial landscape. If you're unsure about your path to retirement, teaming up with a fiduciary advisor could provide much-needed support.

A fiduciary advisor is a professional who prioritizes their clients' interests above all else. They can assist you in crafting a tailored retirement plan and staying focused on achieving your financial goals.

At Agemy Financial Strategies, our fiduciaries are dedicated to empowering our clients with knowledge across various financial domains. Our purpose is to educate retirees - whether that be planning for retirement, legacy planning, wealth management, or just holding your hand when it's time to leap into retirement. We are celebrating 30 years in business, and we remain steadfast in our dedication to serving and educating retirees.

If you're interested in learning more about our offerings, see here.

Final Thoughts

Whether you're nearing the start of your retirement journey or newly retired, this process demands thorough preparation. 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 firmly believe in fostering financial stability and empowerment, particularly in the golden years of retirement. Our retirement income planning services are just one of our many resources designed to help you take control of your financial journey. This Financial Literacy Month, take charge of your retirement journey, overcome challenges, and pave the way for a secure and prosperous future with our team by your side.

Contact us today to schedule your complimentary retirement strategy session.