Broker Check


January 11, 2022

The idea of retirement evokes a mix of emotions, including excitement and apprehension. You may be wondering how early you can realistically retire, how much it will cost, and whether you’ll have enough to sustain your lifestyle over the long term. In fact, 60% of Americans say their biggest fear is outliving their retirement savings. Regardless of your age or current stage of life, planning for retirement is essential to securing your financial future. So, how should you get started?

You don’t have to let the complexity of financial planning for retirement overwhelm you or, worse, keep you from getting the ball rolling. It’s important to move forward as soon as possible in order to prevent unpleasant or unexpected outcomes in your highly anticipated retirement years. Though current research shows some harsh realities and statistics regarding modern American retirement, planning and experiencing a comfortable retirement is within reach.

 To give you some perspective on how to begin the financial planning for retirement process, here are 8 expert tips. Use these insights as a framework to start planning for retirement and gain peace of mind along the way.

1. Explore Your True Purpose for Money

The truth is there’s no “typical” retirement experience or any universal truths about the matter. How you plan for yours will depend very uniquely on your own financial and lifestyle circumstances. That’s why it’s critical for you to reflect on and explore your purpose for money before setting any type of financial goals.

That’s right, one of the first steps in the retirement planning process is taking time to think through your what matters most to you—your true purpose for money. If you want to live a rich life and plan for a happier, healthier retirement, you should consider everything that will impact your wellbeing then align your money with your purpose in life.

 2. Determine Your Retirement Goals  

Many sources say your retirement savings should total 10-20 times your current income, and that you'll need about 70-80% of your pre-retirement income in retirement. However, after meeting with families over the years, real life has shown us that very few people actually want to reduce their lifestyle after retirement. Therefore, you may need 100% of your income.

 After you’ve determined your goals and purpose for your money, the first variable you need to define is the year you plan to retire – meaning when you’ll begin withdrawing from your retirement savings. You’ll also want to do some reflection about how you envision your retirement lifestyle. Will you continue to work (albeit on a revised basis)? Do you have dreams of traveling or bringing family together in unique ways? Will you want to continue living in your current location or seek another geographic area? Defining these types of goals, your purpose and lifestyle aspirations will help set the stage for the kind of retirement strategies you’ll need to adopt to make those plans a reality.


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3. Review Your Assets and Organize Your Financial Information

To both access your current financial state and planning for retirement, it’s necessary to gather all of the documentation and information on your finances. The following are some of the most important records you should collect and organize for this purpose: 

  • Employment and tax documents, including W-2 and 1099 forms, as well as pension information (if applicable)
  • Information on your mortgage, title holder, purchase price and current value of your home and any other real estate you own
  • Financial institution accounts and balances Information on your professional advisors, such as personal accountant, banker, lawyer or trust company
  • Any loan accounts or credit cards you may have
  • Documents and information regarding your personal investments, including firms, account types and values
  • A list of valuable personal assets, such as cars, boats, furniture, jewelry and art
  • Documents and information regarding retirement plan types and values
  • Business investment types and percentage of interest held
  • Will, trusts, life insurance and any other estate documents

With all this information at hand, you and your financial coach will have a clearer picture of how far along you are in the retirement financial planning journey, and where modifications to your plans or strategies should be made. Before you can get to where you want to be, you need to understand where you are now. 

4. Begin Saving Money Right Away

One in three Americans report having no money saved for retirement, and one in four have less than $10,000 saved. So, it’s no surprise that only 51% of Americans are confident they're saving enough for retirement. The best advice you can take i s to start saving NOW. Even if you can only manage small contributions to your retirement savings, it’s worth it to do so. Compounding interest over the years can turn small investments into big returns.

If you’re not sure how to make room for savings, take time to work up or adjust your monthly budget. Be sure to track your current spending and then assess the patterns. Break down your expenses based on different categories, and make adjustments that allow you to allocate retirement savings contributions. Even minor cuts or tweaks can help you find opportunities to start saving for retirement now. Also keep in mind that the longer you can keep your retirement portfolio untouched, the more your investments will potentially grow. The opportunity cost of withdrawing from your retirement savings really adds up over the years.

5. Evaluate Appropriate Risk Levels 

No investment is without risk. The more risk you’re comfortable taking, the greater your portfolio's earning potential may be. Investors sometimes sacrifice investment returns by taking an overly conservative approach early in their lives, leaving potential growth on the table.

On the other hand, there are also investors who take on too much risk for their particular situation. As many investors age, they shift portfolio assets into investment vehicles that bear less risk. This is a well-regarded and long-established tenet of investing, but it’s important to understand that i t does not automatically apply to everyone. Some retirees may need to invest for growth well into their 60s or 70s because they haven’t saved enough for retirement. 

Investing is highly personal and, therefore, you should take your entire financial picture into consideration. Some of the most important guidance a professional financial coach can give you revolves around risk and how you should diversify your portfolio.

6. Increase Your Social Security Income

Holding off on Social Security for as long as possible may be a smart move depending on your personal situation. Why? Well, your monthly benefit will potentially be 25% smaller if you claim Social Security at 62 instead of your “full” retirement age of 66. If you wait until 70, your monthly benefit will be 32% larger than if you had taken it at 66. 

Again, everyone’s circumstances are different. Some people may apply for Social Security benefits in their early 60s because they really need the income. For most retirees, waiting longer implies a larger lifetime payout, but not everyone can manage to wait and take benefits later. 

7. Consider Tax Implications

If you are considering a Roth IRA or Roth 401(k) conversion, the big question is whether the tax savings in the end will be worth the tax you pay on the conversion today. Roughly speaking, the younger you are the greater the possibility this conversion tax is worth it. That’s because your highest-earning years are likely in the future. But the conversion may not be right for you if you are at or near your peak earning potential.

When planning for tax-qualified plans such as IRAs, 401(k)s and qualified retirement plans, you should carefully examine the potential taxes that impact these assets. As always, it is critical to consult your tax advisor when you make any financial or investment plans for retirement.

 8. Partner with a Financial Coach

Enlisting the support of a qualified, experienced financial coach is one of the best things you can do for your retirement planning efforts. From providing objective financial advice on budgeting, investing, and creating lifetime income to offering guidance on life goals, values, priorities, charitable giving and figuring out your retirement date, a coach has the knowledge and expertise to help you navigate your personal and family financial picture.

Being able to make purposeful, informed choices and take timely, confident action in support of what really matters most to you is one of the biggest drivers of long-term financial success. No matter where you are in life, the guidance, strategies and services of the right financial coach can help you align your money with your purpose and steer you to (and through) a secure retirement. 


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