1. Set realistic goals.
2. Call in the experts.
3. Take advantage of catch-up contributions.
4. Time your exit.
5. Tackle debt.
6. Prepare for the unexpected.
If you’re among the roughly six out of 10 individuals who has never tried to calculate what they need in retirement, do it pronto. That figure is like a destination on a map, giving you direction as you save, invest and create your overall financial plan.
1. Set realistic goals
First item for consideration: Your savings and investments thus far. Hopefully, you’ve been stashing funds away consistently, making maximum contributions to things like 401(k) plans and other accounts. These days, individuals 55 and older are on track to replace roughly 55 percent of their income during retirement with personal savings, Social Security and pension income. That means they’ll have to live on 45 percent less cash each month once they retire.
How much is enough? That depends on your lifestyle and expenses, potential medical bills and the kind of support you’ll have from, say, a pension plan and Social Security.
2. Call in the experts
With that in mind, it may be a good idea to seek a little professional guidance to ensure you’re setting realistic goals.
3. Take advantage of catch-up contributions
One of the first things a pro will encourage you to do is to keep saving. If you’re still working and over 50, there are ways to catch up. But you’re going to need growth in your portfolio.
4. Time your exit
Savings and investments alone may not be enough to adequately fund your retirement. Planning also means making some vital life decisions, too. There’s a whole new need for people to work longer. People find they didn’t save enough. Work is a fundamental and new part of retirement.
5. Tackle debt
Part of the equation when you quit work is lingering debt.
6. Prepare for the unexpected
Safeguard your finances against unexpected medical costs, even if you’re certain you’ll be insured as a retiree. Many companies are scaling back lifetime health coverage for former employees. This year, 10 percent of companies expect to eliminate subsidized medical coverage for employees who would have been eligible.That leaves you vulnerable to some hefty medical bills that can quickly eat up a lifetime of savings. One option is long-term health insurance, which pays for extended medical care including such things as nursing and assisted living.
Retirement is like a two-edge sword you’re looking over your shoulder, concerned that something drastic could happen to you or to your partner, and you could be financially wiped out as a result. But, you’re also enjoying the freedom of doing what you want.
Raider Dennis participated and sponsored American Cancer Society “Relay for Life” event.
Investment decisions can be daunting many decisions are often needed to be made based on the advice from financial advisors helping their clients to make the right choice. Given the extent of their influence on our financial security, it is advisable that we take appropriate care in choosing our financial advisor.
It may not be easy to clearly understand and differentiate between the different types of financial advisors who deal with us, especially since titles are often used interchangeably but it is important that you ask the right questions to appreciate the nature of their service as well as their obligations to you as a client. This is important to understand since it affects the quality of advice received.
Understanding Different Categories of Advisors
Financial advisors typically operate under one of the two legal standards – suitability and fiduciary. The suitability standard requires investment advisors to give advice that is suitable to your situation while the fiduciary standard requires advisors to provide recommendations that are in your best interests without any interfering conflict of interest.
Stockbroker: Also known as wealth managers, financial advisors, broker-dealers, these finance professionals are authorized to sell investments to you and receive commission on these transactions. These professionals are held to the lower legal standard of suitability. Brokers accordingly are only expected to provide you advice that is suitable to your needs, goals and circumstances and nothing more. This allows for a situation where the professional may recommend a product with higher fees to his client just because he receives better compensation from it.
Registered Investment Advisors: The Investment Advisors Act of 1940 established a fiduciary standard to which registered investment advisors are bound. The fiduciary standard requires the advisors to put the client’s interest before theirs and avoid any conflict of interest. Fiduciaries are required to give up-front disclosure to clients across their compensation structure, services, qualifications, conflict of interest, investment approach and other key elements.
Dual Registered Advisors: These professionals registered as both brokers and investment advisors. This lowers the legal standard of the dual registered professional to that of suitability.
Insurance advisors: Many Insurance advisors are simultaneously licensed to sell insurance products and having credentials are a necessary and a great way for agents to distinguish themselves. The other key reason to pursue agents with credentials is the codes of conduct and ethics that generally go with membership in these groups.
Why is it important to Choose a Fiduciary?
According to the President’s Council of Economic Advisers non-fiduciary advice results in Americans losing 1 percent point of their annual return, which shows just how important it is to ensure that we are picking the right advisor:
• Best suited investment advice: Fiduciaries provide information after a thorough understanding of a client’s situation, needs and goals whereas brokers might give recommendation that benefit them.
• Recommendations not driven by commissions: Stock brokers are not considered advisors per se, as their advice is seen incidental to the commercial transaction. The objectives differ between a stockbroker and a registered advisor since a fiduciary seeks to achieve your best interests while the broker seeks to close the sale.
• Legally bound disclosures: Advisors have no requirement to disclose any information including conflict of interest which affects the client’s decision making process. Fiduciaries on the other hand are bound to disclose all material facts which enables the customers to get a clear view of the situation before making a decision.
• One-time vs long standing relationship: Brokers can make a sale with a client and never go back. But fiduciaries typically check-in regularly with the clients so as to ensure that the clients’ financial investments are aligned to their needs on an ongoing basis.
The sound of retirement may be extremely sweet to your ears but it can be extremely bitter once you actually get there. Retirement can be both a beautiful dream and a nightmare for you and it solely depends on how you work towards the end result. One cannot just simply continue with his daily regimes and wait for his retirement to come. Everyone needs to make some arrangements well before their retirement. In order to secure your future, you obviously need to secure some funds which will be of great support to you when you have no other source of income. Most people make the mistake of not planning ahead taking the concept of retirement too lightly or figuring it is so far off in the distance.
Here are 5 things that you must immediately stop doing with your money:
- Stop building your credit debt: If you seriously think that you are valued because your credit card company says so, then you are making a huge mistake. There is practically no way that you are getting any advantage from a credit card if it simply makes you spend more. Credit card bills can also pile up. It is best to pay the bills in full payment and on time each month in order to avoid the amount to grow in the future.
- You are not investing: Another big mistake that people make during the younger years is that they keep too much money sitting in liquid assets rather than investing it. According to, Things You’re Probably Doing Wrong with Your Money, investing money will likely grow fast enough to keep up with the inflation or rising prices. It will also let you retire comfortably with more than enough funds.
- You aren’t aware of your net worth: Most people commit the mistake of thinking that they will begin retirement with no problems because they are earning well when younger. People always think in terms of monthly payments which are more than enough to get them by, but they never try to assess their total net worth which is actually the total of their assets minus any money that they might owe.
- You don’t know about your costs: When we have a constant income, we generally don’t sit down and calculate all of our expenses, however, post retirement, we need to calculate mandatory expenses beforehand because no longer having a constant income. We also need to always keep a surplus amount of money after our mandatory costs for any emergency expenditures such as medical costs. According to, Top 10 Reasons People Go Bankrupt, A recent Harvard University study showed that medical expenses account for approximately 62 percent of personal bankruptcies in the US.
- You take risks without analyzing the situation: Another very common mistake that individuals make these days is that they take dangerous risks with their money without properly analyzing the situation as well as possible future outcomes. Everyone should invest, however, investing without proper information will not lead to any good so consulting a financial advisor is always appropriate advice.