Ring-In Retirement Readiness with These Resolutions

A new year has dawned, and you can feel the anticipation in the air. People everywhere have scribbled down their New Year’s resolutions, as 2019 has swept in the allure of new beginnings.

A world of opportunity awaits!

Perhaps with a nod to another passing year, many of us will put eating healthier at the top of our list of resolutions. Hitting the gym more often (or even at all), being more productive with our time, and perfecting our work-life balance are perennial New Year’s Resolution favorites.

And for those in their 50s who have visions of their ideal retirement, the New Year is an ideal opportunity to take stock of what they want to achieve. It’s a time to evaluate where they are in terms of reaching that goal, and to reflect on whether they need to create or refine a retirement plan that will help them get there.

Especially for those who are planning on retiring within the next five years, here are three New Year’s Retirement Readiness Resolutions.

Resolution #1: Evaluate Your Progress

Maybe you have been maxing out your 401(k) contributions. Or perhaps you are funding a Roth IRA to build up your nest egg. Your portfolio may even include some brokerage accounts, mutual funds, or other investments for asset accumulation, tax efficiency, and other long-term goals.

It’s time to take stock of these valiant efforts and see just what they amount to.

Review your financial accounts, investments, and retirement accounts. If you feel like you are not where you need to be with your nest egg, what steps could take to reach there?

Can you begin to make catch-up contributions at work? Are there any cuts you can make to your lifestyle expenditures that would result in a greater stockpile of liquid assets?

How have your investments performed? Did the closing days of 2018 put a crimp in your investment portfolio?

See what you have to work with, so you can better determine your readiness for retirement.

Resolution #2: Revisit and Refine Your Retirement Goals

Perhaps when you first drafted your retirement plan, you and your spouse had travel plans. The goal may have been to exchange your home for a luxury RV so that you could live a life of discovery.

Just as when we are young and we all want to grow up to be doctors, musicians, or baseball players, your vision of the ideal retirement may have changed.

Maybe your spouse is not all that excited about giving up indoor plumbing and living life on the road. But they might not have shared this change of heart with you.

To make sure you both are on the same page, ask yourselves these questions:

• When do both of you want to retire?
• What do we want our retirement to look like?
• What are our top priorities?
• Will we live in our current home or transition to something different?
• What activities, passions, and hobbies will we pursue?
• Will we travel just to see family or to tour the world?
• Looking at a calendar, when do we want to achieve these goals by?

Resolution #3: Create a Retirement Budget

Now that you have confirmed what you want to do and where you want to do it, what will that cost? Starting with the answers to the questions above, you will get a good idea as to the price tag of your desired lifestyle.

A fundamental question to answer is this: Will your lifestyle spending will go down during retirement, or will it increase? You might find that your spending picture will change considerably from years before, as you will have more time to pursue the things you have put off until retirement.

A study by the Employee Benefit Research Institute found that that close to 50% of retirees actually spend more in the years just after retiring. Three years after claiming Social Security, the median taxpayer’s spendable income was 103% of the income reported the year before they began collecting, according to the 2017 EBRI report.

Use your current expenditures (and do a little research) to pencil in your rough retirement budget. This will help you see if there is an alignment between your nest egg and what you expect it to pay for.

And if you are having difficulty coming up with your estimated expenditures, start with the spending items that are part of your current spending pattern. Harder-to-estimate expenditures — such as healthcare and long-term care — can be factored in later.

You may find the articles on long-term care planning and healthcare spending estimates to helpful.

Needless to say… If your nest egg falls short of meeting your retirement budget, it’s best to know that now so you can re-evaluate – or reprioritize – items on your wish list.

Resolution #4: Take Action

Don’t be like those people who turn their treadmills into dust collectors just weeks into the new year.

You are the person who cares most about your financial future. So, take the time to answer the important questions above. Then create an action plan that will help you realize the golden retirement you have worked decades to achieve.

You don’t have to go it alone. Consider working with a financial professional who can “coach” you toward retirement financial fitness.

Studies show that working with a financial professional can lead to higher retirement savings, more retirement income, a higher sense of financial security, and a better overall sense of financial wellness.

No retirement income plan can anticipate all the highs and lows that you may face in retirement. Nevertheless, planning will go a long way.

Creating your plan, and revising it when necessary along the way, will increase your chances of not outliving your retirement income. And it’s a closer step to enjoying the secure retirement you deserve.

Need Help Putting Your Financial Resolutions into Action?

If you could benefit from the guidance of a financial professional, someone at SafeMoney.com can assist you.

Use our “Find a Financial Professional” section to connect with someone and discuss your financial goals. Should you need a personal referral, please call us at 877.476.9723.