The Roadmap to a Fulfilling Retirement
If you were to poll pre-retirees and retirees in Scottsdale, Arizona, and beyond who are in their 50s and 60s about retirement planning regrets, many would admit they wished they began planning a retirement roadmap earlier. The little-known truth is planning for a fulfilling retirement is a long process.
However, most people do not start thinking about retirement until their 40s or 50s. After all, it takes time to pay off student loans and a home mortgage. Whether you are in your 20s, 30s, 40s, or 50s, you still have at least a decade or two to establish a roadmap to a fulfilling retirement. Read on for some tips:
The Best Roadmaps to Retirement Begin in Your 20s
Though some people are saddled with exorbitant student loan debt, credit card debt, and a home mortgage in their 20s, most may also have the opportunity to save at least a portion of their earnings for retirement. This can be considered the most important time to establish a detailed budget and stick to it.
Carefully dissect your paycheck to determine how much discretionary income remains after your debts are fulfilled. A percentage of your discretionary income can then be diverted to retirement savings and investment accounts to help set the stage for truly fulfilling golden years.
You do not have to do all the retirement planning on your own. The professionals at Prime Wealth Advisors are available to help you plan for your golden years. We can take a look at your unique situation and get you started on the right track.
Furthermore, your employer might provide a company-sponsored retirement savings/investing plan such as a matching 401(k). Sorting through all the retirement savings options ranging from 401(k) plans to Roth IRAs and beyond becomes a little easier with the help of a financial professional. You may want to redirect as much of your discretionary income toward these retirement investment vehicles as you can. You should also have an emergency fund to help with the unexpected, such as sickness, demotion, a reduction in hours, or termination.
Transitioning to Your 30s
You will likely be comfortable with your line of work once you are in your 30s. At this point, you may have a more complete understanding of your budget as well as your goals for retirement planning. It is vitally important that you continue to increase your retirement contributions throughout your 30s as much of this money is invested in stocks and other investment vehicles designed for a longer investment horizon.
Those in their 30s have a different risk profile than those in their 40's or 50's. If you are uncomfortable investing your hard-earned money in investments with a considerable level of risk, you and your financial advisor can create a plan that will manage the risk you are comfortable with.
If possible, you should consider maxing out your 401(k) contributions while in your 30s. As of 2020, workers are permitted to contribute upwards of $19,500 to a 401(k) plan. If you are likely to earn $123,000 or less this year, a Roth IRA is another solid retirement account option worth consideration. Roth IRAs can be considered favorable as they allow money to increase in value while deferring taxes to a later date.
Above all, those in their 30s should resist the temptation to withdraw money from their 401(k) plan or borrow against it. Your financial advisor can explain the many penalties that such actions trigger.
Retirement Planning in Your 40s Should be Centered on Diversification
Now that you are entering your 40s, it may be time to comprehensively diversify your investments in terms of industry, geographic exposure, and risk. The time to take significant risks with your savings may have come and gone. If you were to leave a considerable amount of money in risky investment vehicles while in your 40s, there is a chance you might lose a large portion of your savings and end up moving your target retirement date 5 or 10 years down the road.
This is why it may be important for you to lean on a financial advisor for guidance in your quest to diversify your investments as you segue from your 40s to your 50s. This professional can help you determine if it is prudent to move some of your money out of traditional investment vehicles such as stocks, mutual funds, and ETFs. Consider additional investment diversification with real estate purchases, bonds, money market accounts, launching a side business, etc.
Transitioning to Your 50s
If you are still working in your 50s, do not feel bad. Most people do not retire until their 60s or 70s. After all, people are living longer than ever, and the retirement age for many is being pushed farther out. Furthermore, most early retirees find life is somewhat boring without work.
Once you reach your 50s, you may want to consider steering your attention toward saving money and investing in low-risk investments such as CDs, money market accounts, and mutual funds. Though, this depends on your unique situation.
As an example, some people who reach their 50s opt for a deferred income annuity bought with either a single lump sum of cash or paid for with yearly premiums. There may be benefits of a deferred income annuity as it can provide an ongoing source of income across posterity. Buying into such a plan in your 50s may be viewed as somewhat low risk simply because the annuity provider won’t commence payments for upwards of several decades.
At Prime Wealth Advisors we know it can oftentimes be stressful when beginning the transition into retirement. Questions such as "Will I have enough money?", "Can I retire now?" or "Will I run out of money in retirement?" are quite common. Our job is to help you with the answers and a plan for a secure, comfortable retirement. We focus on longevity and our three-phase approach begins with pre-retirement planning.
The Home Stretch: Your 60s
Once you reach your 60s, you might want to start reviewing the Social Security and Medicare benefits that may be available to you. The professionals at Prime Wealth Advisors can not only walk you through these benefits but we can also help you review the nuances of your estate planning. We believe that by having financial planning, retirement planning, tax planning, risk management, and estate planning all under one roof we are able to provide you with the efficiency that will save money and produce results.
You can meet with a financial advisor to discuss whether or not an early retirement makes sense as compared to remaining on track for retirement in your mid-to-late 60s. Social Security is available at the age of 62 yet your monthly checks will be less than if you had waited to claim Social Security until older. However, once you reach age 70, the increases in monthly payments end.
You may want to wait to retire until you are absolutely certain your financial roadmap guarantees you can enjoy truly fulfilling golden years. At Prime Wealth Advisors our mission is to create financial plans so that you can realize your dream of a comfortable retirement. Contact us today to schedule a complimentary consultation to discuss your unique situation and how we can help.