Dealing with Unexpected Death

Approaching retirement can sometimes be as overwhelming and nerve-wracking as the transition into your Golden Years. You may start reflecting on what you’ve accomplished thus far in life and what you envision still achieving.

As you near the finish line, here are four things to do in the last ten years of your career.

Create a List of Things You Want to Accomplish in Retirement

The first step is understanding your goals for your retirement. What lifestyle do you envision maintaining? Will you travel? Will you live in the same home? What will you do during the day? As much as you may enjoy golf, you may tire of doing it every day for weeks on end.

Creating a list of retirement goals gives you something to look forward to, and may even motivate you to save more aggressively to reach your retirement goals faster. For example, if you imagine enjoying plenty of family vacations in retirement, you may need to establish a vacation fund.

You may instead envision spending your time volunteering or enjoying hobbies, be it woodworking, gardening, or painting. Regardless of how you choose to spend your time, make plans for it. If you don’t, other family members may be planning out your time for you. For example, you may become the default caretaker for your aging parents, especially if your other siblings are still working. Or you may become the “full time” babysitter for your grandchildren because your children assume you aren’t doing anything all day.

Pay Off Debt

The less debt you have when you enter retirement, the better. Review all current debts you face and compare interest rates and balances. This can help you decide which to pay off first. Once you’ve eliminated credit card and auto debt, see how you can aggressively pay off your mortgage. Not having a mortgage could significantly reduce your monthly expenses and make a considerable impact on how quickly you deplete your savings.

Along with tackling debt, take care of the big-ticket items now, rather than delaying them. These include replacing your home’s roof or other expensive repairs, updating old appliances, addressing your long-term care needs, and keeping your car in good working shape. It’s ideal to do this now while you still have a paycheck rather than when you’re retired and trying to live off of your savings.

Plan Out Your Expenses and Create a Budget

A common question pre-retirees ask is, “will my income sources cover my needs in retirement?” A budget is helpful throughout life but can be particularly beneficial during retirement when your income may be more limited.

Start by creating a budget that includes your essential expenses (housing, healthcare, and food) and your discretionary expenses (such as traveling, entertainment, and dining out). With this list, match essential expenses with guaranteed income, such as setting aside your Social Security benefits to pay for your healthcare. Then, look at your other savings and income to cover your discretionary expenses.

If your projected expenses don’t match your income and savings, you’ll either need to reconsider your expenses or increase your retirement income. These 10 years leading up to retirement can serve as a “trial run” to help instill a higher level of confidence that you can live off a certain level of income once you retire.

Hire a Financial Advisor

How much should you contribute to your 401(k)? What types of investments make the most sense for your circumstances and goals? Often, it’s not until we face a significant decision or make a mistake when we realize that we weren’t equipped with the proper knowledge. And then it may be too late to find help or rectify any missteps we make.

A financial advisor isn’t just there to hand you a financial plan and set you on your way. Think of an advisor as your lifelong financial partner. He or she can provide education, objective advice, and ongoing guidance as you encounter new challenges and opportunities.  This could mean adjusting your strategies, or simply reassuring you of your progress. With education and a reliable partner available to answer your questions, you can feel empowered to make informed decisions.

Next Steps

You don’t have to go at it alone and plan for your retirement on your own. At this point in your life, you should work with an advisor who can help you create a personalized retirement roadmap and work through various retirement scenarios, not just help your money grow. As an independent financial advisor, I want to help you address your retirement questions and feel confident about your future. I can work with you to establish a retirement strategy that integrates your goals and needs. Take the first step by reaching out to me for a complimentary consultation. Call my office at (949) 221-8105 x 2128, or email me at michael.loo@trilogyfs.com.

Words are power, and each word has its own weight and energy. Words have inspired people to stand up for what they believe in or hang their head down in defeat. Therefore, choosing the right words to describe that which you want to manifest is very important.

For example, when speaking of aspirations for the future, there are those who use the words dreams and goals interchangeably. However, they ae distinctively different in definition and performance. A dream is boundless, fueled by your passion and imagination. However, it is akin to fantasy, with no immediate call to bring it to life. When someone tells me they dream of owning a sports car or starting their own business, I know most of the work to make that dream a reality hasn’t taken place and probably won’t for the foreseeable future.

A goal, on the other hand, is the mapwork to that dream, concrete and behavior-driven. When you have a goal, you have markers, measurements and steps to get to the destination. Setting the right goals, especially when it pertains to financial goals, can have a significant effect on how and when you achieve them. In fact, a guide to good goal-setting has long been to make it S.M.A.R.T.1:

Specific: if we are truly making a map towards our goals, telling ourselves to go in a general direction or for an undefined distance is most likely only going to get us lost. Steps towards our dreams have to be detailed and specific.

Measurable: When a goal is measurable, there is a way to track your progress to stay motivated or identify issues that may need problem-solving.

Attainable: It is admirable to be striving for something grand and lofty. However, it’s imperative that we have feasible goals that we can accomplish to keep us motivated and actually accomplish said goal.

Relevant: Having impressive goals are fine and dandy, but if they don’t move you closer to your overall goals or work against other goals you may have, it may be time to rethink them.

Time Bound: Once something has been stated as a goal, the stop watch has started. There is an expectation of completion, which is necessary to keep us moving forward towards that goal. It may not get completed in the expected timeframe, but just by having a deadline, we can stay accountable.

Based on this description of a S.M.A.R.T., you can see that there is a difference between, “I’m going to start saving money for a house,” and “I’m going to put 15% of my paycheck into a savings account specifically designated for my eventual down payment, and I should have enough saved after 3 years.” One expresses a desire while the other one lays out a concrete plan to achieve the goal.

If one seems to be fueling the other, how can a dream inhibit a goal? Well, one way is when your lifestyle fits with your dream rather than your goals. To achieve many financial goals like saving for retirement or buying a home, one needs to save and stick to a budget. However, if you fail to save and incrementally work towards the goals, it will take longer and longer to see results. Worse is if you choose to skip the incremental steps and live your dreamer’s lifestyle by using credit cards. The debt you accumulate will take you farther and farther from your goals and possible put you in an unfortunate and stressful predicament.

Sometimes when we haven’t developed a goal for a dream, it’s vagueness can work against an already established goal. Perhaps a good friend asks you to go into business with them. If you choose to pour funds into this new endeavor without any parameters, you may find yourself taking funds away from saving for retirement or depleting savings you already had. Of course, if you had outlined your goal on how to contribute to your friend’s business, with specific and timely parameters, the situation could be completely different.

Please understand that I’m not asking you to stop dreaming. In fact, quite the opposite. I happen wake up every day saying, “Dream Big! Work Hard! Laugh often!” I sign letters and thank you notes and end employee meetings with those very words. Dreaming is important.

So please know I want you to dream big and bold. At the same time, I want you to buckle down and create some S.M.A.R.T. goals to propel you closer to your dreams.

https://www.mindtools.com/pages/article/smart-goals.htm

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.