Key Steps to a Successful Retirement Strategy

No matter how old you are, it’s never too early—or too late—to start planning for retirement. Retirement plans and strategies may differ by age and relative wealth, but the goal remains the same. You deserve to be comfortable in your golden years, and you can’t depend on generous relatives or the government to pay all of the bills.

When you start planning for retirement, you’ll take a big step toward financial freedom. Working with a good financial advisor can make the process even easier. Here are the first few steps toward retirement success:

  • Figure out how much time you have: Timing plays a big role in your retirement funds. If you have a longer period of time—more than 10 years—you should have the majority of your funds in stocks. They’re riskier, but they tend to pay off better than bonds and other “secure” investments. The older you are, the more you’ll need to pay attention to your income and capital.
  • Find out how much money you’ll need: Before you can retire, you need to have a realistic idea of what your spending will look like. Will you still be paying off a mortgage? Do you have other major costs—like healthcare—to account for? Most people assume that they’ll spend significantly less when they’re retired, but many studies have shown that this is simply not the case these days. When you factor in the ever-increasing cost of living, your savings need to be higher than you’ve probably assumed.
  • Determine the after-tax rate of investments: If you have already invested your retirement savings, now you need to determine their after-tax rate. If your required rate of return is over 10 percent annually, you’re unlikely to achieve those goals. Depending on what kind of retirement funds you hold, they’ll be taxed after you start to withdraw funds, so you need to assess your tax status and the rate.
  • Find out your risk tolerance as opposed to investment goals: You shouldn’t be watching the stock market rise and fall and getting hung up on that kind of movement. Working with a good financial advisor can make your retirement plan easier to manage, especially when it comes to risks vs. goals. Your financial advisor will be able to tell you whether you’re diversifying your retirement funds into something that will serve you over the long term, or if it’s too risky for a short-term plan.
  • Make an estate plan: Finally, make sure you establish an estate plan. Whether you die well into retirement or pass away prematurely, your funds will be passed along to your beneficiaries. How much of that money is subject to additional taxation depends on how you have your retirement plan set up. There’s never a bad time to consult with a financial planner and estate planning attorney, even if you plan to live forever.

When it comes to retirement plans and strategies, you need professional assistance. Safe Path Financial can help. Call us today to learn more about how we can help you plan for the future.