What are your biggest concerns about money and retirement?
While it’s nice to read articles that emphasize the positive, it’s often the mistakes we avoid that make the difference between success and failure.
With that mind, here are 6 retirement money hurdles you need to master for a solid financial future.
1) How Will You Pay Your Bills?
If you answered, “I’ll pay my expenses with my retirement savings,” you might need to reconsider.
Many people have been told that a good retirement income rule is to set a goal to earn (between returns on investments, Social Security, etc.) the equivalent of 70 to 80 percent of what you earned before you stopped working.
True, that might be okay for a while. However, most retirees find that 70 or 80 percent doesn’t provide enough cushion for health emergencies, which are the #1 threat to your retirement budget.
But health expenses aren’t the only concern. What about investing in new hobbies, travel, family, kids in need, home repairs and your grandchildren’s education?
Beware, because what seems like enough on paper, may not be enough when it comes to actually meeting your monthly expenses.
2) How Secure is Your Job?
You’re preparing for your transition to retirement, which is a good thing. But are you overlooking an unexpected forced retirement?
More than half of us are forced to retire earlier than we planned.[1]Beyond layoffs and firings, many people have to retire due to personal health issues or the health of a loved one.
3) Social Security Rule Changes
At least Social Security is stable. Well, maybe not. Think back a year.
Millions of married people who were planning to retire in 2016 found themselves with one less income earning strategy.
In November 2015, Congress announced a sudden end to the “file and suspend” option, which allowed the higher-earning spouse to file for Social Security benefits, then suspend them, only to reclaim them at a later date (and at a higher rate).
File and suspend enabled the lesser-earning spouse to start earning monthly benefits equaling half of the higher-earner’s full Social Security benefits right away.
This strategy sometimes resulted in upwards of $130,000 of extra income over a 25-year retirement.
But that’s all over.
What will the changes be over the next 10, 20, 30 years? The bottom line is, what we expect from Social Security today is likely to change in our lifetime.
For more information about the ins and outs of Social Security, download our free 10 Social Security Facts Guide.
4) Investment Diversification
If you have not diversified beyond your 401k or IRA, take a close look at today’s balance and circle it. Ask yourself, “Can I stretch this out for the rest of my life?”
If you don’t diversify, that’s the scary reality you’ll face when you retire.
Even if the answer is, “Yes, and several generations beyond,” then the question is, why haven’t you diversified? We live in an ever-changing world, and in order to withstand global shifts in the markets, it’s imperative that you build a diversified portfolio.
5) Managing Risk
You may be like a lot of Baby Boomers who have worked hard, saved well, and invested wisely for the future. And now that retirement is within view, you might be thinking you can let up a little and start to cruise.
Let me assure you that now is not the time to lose focus.
The reality is, the majority of us get caught shorthanded when it comes to crunching the numbers we think we need compared to what we are actually going to need.
Unfortunately, I see more folks who continue to run up against unexpected expenses, whether it’s health emergencies, home repair, or just the cost of day-to-day living edging up. And before they know it, what was once a secure retirement nest egg is now diminished.
One of the most worrisome retirement facts is this: A whopping 60 percent of retirees run out of money a full 9 years before the end of their lives.[2]
6) The Best Plan to Secure Your Future
Even if you’ve amassed a formidable savings account, such as a few million dollars, and think you’ll be fine, while that was once true, it’s often not the case any longer. There is no such thing as a completely secure future. You have to plan to make your assets last.
While almost no amount of savings ensures that you’ll always be flush, thorough planning can go a long way toward making your actual future match up with the future you’ve always envisioned. To get help creating a plan that can provide a more secure future for you and your loved ones, talk to an advisor today.
[1] April 2015 AARP
[2] December 2014 AARP
