History and modern economic theory have shown that there has been a natural ebb and flow to the economy. However, the Great Recession of 2007-2009, 9/11/2001, and the COVID-19 pandemic of 2020 have also shown that sometimes we cannot predict when the economy will take a direct or indirect hit. It can be mind-boggling that one minute your retirement savings are performing well and seem to be safe and sound. Then a single event starts a chain reaction that now has your dreams of an affordable retirement beginning to fade and putting you on edge.
The world is in the throes of a pandemic. People are getting sick, lives are being lost and the stock market is in a free fall. COVID-19 is affecting every aspect of daily life--and likely will for months to come. It's left a lot of people wondering what to do about their retirement and their 401(k) accounts.
Preparing for retirement is a major focus of your years in the workforce, regardless of what type of career you are pursuing. All too often, confusion and stressfulness mark the retirement preparations of many - but it doesn't have to be that way!
Too many people let retirement sneak up and take them by surprise and enter their golden years inadequately prepared. But you don't have to let that happen to you! There are definite steps you can take and decisions you can make now that will positively impact your life and income stream then.
Saving for retirement is often touted as easy and simply a case of putting your mind to it. For something that is supposedly so easy, a large portion of the population fails to do it year after year. If you're waiting for that magical time period where tucking $15,000 or more per year into your nest egg is going to become gleeful second nature, well you'll be waiting a long time. Saving is hard and there are a lot of hard choices you need to make in order to effectively save for retirement, especially if you are low income.
Now more than ever before it is important to do more than simply plan for your retirement. The bare minimums and so-called ideal numbers rarely take into consideration the full, long lifespans that many people are living today. Retirement is often viewed as the absolute final stage of your life without thought given to the variety of changes that can and often do occur in your elder years. Here are three reasons why you should rethink your perfect retirement plan.
Planning for the day you retire is never as easy as it seems. Changing laws, growing costs of living, and overlooked needs and aspects of retiring can become overwhelming the closer you get to the big day. It is too easy to fall into the trap of believing that blindly saving something is fine, and all will work out in the end.
Have you fully prepared for your current or future retirement? Most preparation-conscious individuals have no doubt developed a budget with all their customary expenses and are, at least for the moment, determined to stick to it. If your home is paid off, you may have gleefully excluded this expense, among others from your budget plan. Free of the rat race, there are no more costly commuting expenses, and you may even be able to finally kick that expensive Starbucks habit. Everyone loves to have strictly defined sections on their budget, but your emergency savings may end up being the most important of all. Still, there are other expenses that can frequently be either overlooked or underestimated.
The financial and particularly budgetary side of retirement planning will always be a core part of preparation. However, there is far more to retirement readiness than fine-tuning your nest egg and your willingness to stick to a budget. Your goal when you retire is not simply to survive but to also enjoy your time in this hopefully low-stress period of your life.
Formulating or estimating a retirement budget while you are still in the planning process is definitely a challenge. It is only natural to make the mistake of downplaying what we will spend, pretending we will be a tightly reined horse of sorts in that magical moment. Anyone can throw together a retirement budget, but creating one that works is a different story.
We are a professional financial services firm located in Sanford, Central Florida.