Avoid a Retirement Nightmare with Proper Planning

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In the past, we’ve discussed how not planning for retirement comes with downsides. But what if you’re just a few years from retirement? Or what if you and your partner already are retired?

For many American households, a “retirement nightmare” of not having enough money may be around the corner. In a May 2015 report from the Federal Reserve’s Board of Governors, 31% of surveyed Americans revealed they had “given little or no thought to financial planning for retirement.” Likewise, the Boston College Center for Retirement Research found that as of 2013, 50% of American household didn’t have enough retirement funds to sustain their current standard of living when they would reach retirement.

After working hard for many years, most people want to enjoy their retirement. But how should one avoid the ugly situation of running out of money in their later years? Let’s cover this in more detail below.

Overcoming Old Bad Habits

Even when you’re close to retirement, overcoming old financial habits can be difficult. For instance, say a household spends $500-$700 on miscellaneous expenses (for example, eating out, entertainment, and other assorted costs). It’s a habit which this household has engaged in for years.

Even with retirement around the corner, it’s hard to wean off extraneous spending. But it doesn’t have to be a sure-fire obstacle. In financial circles, experts note how more often than not people change bad financial habits: a change in psychology.

Changes in financial perspective may arise in two ways: having a need for extreme changes due to hardship, or having a clear vision of what a positive future looks like. The truth is when someone struggles with budgeting, it’s often because they don’t have a personal mechanism of accountability in place. An emergency situation with new financial pressures or a clear retirement vision providing guidance on current financial behavior – both are powerful impetuses for provoking change for the better.

How Do I Change My Situation?

Ultimately, the first step is changing one’s own outlook. Seniors and their families must recognize what can come about if they aren’t prepared. Once you and your partner are committed to a new course, it’s time for action.

Other steps to consider include:

• Determining what your retirement expenses will be or are
• Determining what your retirement goals and needs will be or are
• Evaluating what your cash-flow in retirement will likely be or is
• Coming up with a target amount of retirement funds, or a “retirement number
• Developing a personalized financial plan based on your needs, goals, and objectives
• Accounting in your plan for potential shortfalls such as market downturns or emergencies
• Covering what role Social Security will play in your financial plan, and when you and your partner plan to file (if applicable)
• Evaluating what your sources of income will be or are
• Going over how you are or will be using personal retirement savings
• Determining what your plan for withdrawals will consist of
• Considering whether you’ll giving any financial support to loved ones
• Taking steps to prepare for readjusting your financial plan if necessary
• Considering how transfer of wealth may take place upon passing away
• Developing a support network of loved ones, family, and friends

There are many financial vehicles on the market, including products with guaranteed income benefits. It’s worth taking the time to investigate whether these solutions may be a good fit for your needs. In short, the process toward retirement security begins with a change in psychology about your finances. Then it’s taking steps to secure your future.

Need Assistance?

If you're ready for personal help, can assist you. Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

Author: Super User

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