Everyone faces challenges to some extent when moving into retirement. Even those with the best-laid plans can still have some financial hiccups. And with everything that has happened in recent years, millions of Americans are wondering what it all might mean for their financial futures.
Take, for example, a 2020 workplace wellness survey put out by the Employee Benefit Research Institute. In the study, 1,028 workers of ages 21-64 said that they worried about their finances and retirement savings.
Two-thirds of employees felt stressed when they thought about their financial future. Almost half were concerned with their household financial well-being, with saving for retirement and having funds for an emergency being the top stressors.
How You Can Secure Your Future?
Many employees felt these pressures to some extent from the impact of the novel coronavirus. But you don’t have to personally leave your financial future to chance.
What can you do personally to keep your plan intact? Here are some key steps that you can take to have your planned retirement stay as much on track as you can.
Nothing is ever foolproof. But these steps can go a long way toward helping you keep in lockstep toward your retirement goals.
1. Assess your situation.
If you haven’t taken a look at your financial plan for some time, it might be a good time for a revisit. Many retirees report that the pandemic has thrown unexpected changes at them.
It’s hard to know how long these changes and disruptions might last for — and how, in turn, they might affect your financial prospects. So, weighing your current financial progress – and whether any changes are needed in your plan – can be of great benefit right now.
Your financial advisor can help you walk through the “what ifs,” but here are some overarching questions to think over:
- Timeline wise, where are you now in relation to your retirement goals?
- How much do you currently have saved for retirement?
- Have your lifestyle expectations and goals for retirement changed from when you last reviewed your plan?
- Has the timetable on any of your goals changed due to health changes, work changes, or anything else?
- If you retired now, how much annual income could you count on from your investments?
- How much would you get in “reliable” income from Social Security? From other guaranteed sources like pensions and annuities?
- How much would you get in “maybe” income from asset holdings that can go up and down in value (e.g., dividend-paying stocks)?
- Has your risk tolerance changed to where your portfolio allocation should be revisited?
2. Evaluate your retirement goals in light of your financial review.
After reviewing your financial situation, you can more confidently know what might need to be done to keep your plans on track.
For example, you might discover that working longer can put you in a better position for retirement. This can be of benefit in a variety of ways.
Not only will you be able to accumulate more money and put it away for the future. It also gives your retirement money more time to grow.
What’s more, you also reduce the long-term horizon for making withdrawals from your portfolio for retirement income. In turn, that lowers your exposure to sequence of returns risk and other financial risks that come from a longer timeline for relying on your portolio for income.
Of course, you may also find that you are able to retire earlier than you expected. The upside for this is, naturally, an earlier-than-planned-for switch from being in the workplace to enjoying the fruits of your life’s work.
How can you make this determination? For retirement, a key metric is ensuring you have enough income to fuel the lifestyle you want.
Your financial advisor can help you calculate these numbers and determine strategies to maximize income with what you have.
3. If your retirement plans involve working, revisit those goals.
Many retirees rely on part-time work as a means of staying socially connected. With people spending as much as one-third of their lives in the workplace, it makes sense that your job is part of your identity.
Even so, with everything that has happened, opportunities for continuing employment or starting a business can vary. Nor is there necessarily a clear outlook for what the job market for post-retirees may look like.
You may want to revisit your working plans in retirement. Firms across industries have reduced personnel, there have been paycuts, and numerous businesses have gone through hard times of entrenchment.
If continuing work or a second-act career factored into your retirement plans, the search may have become that much harder. A good fallback for countering this? Tap into your existing network of personal and professional connections, where you can see if you can shake out some new opportunities.
4. Recalibrate if you have had a job loss.
Of course, the flip-side can happen, too. What if someone faces the unfortunate reality of losing their job or being offered an early retirement package? For starters, here is what you can do if you are forced to retire early.
The key element here is to recalibrate yourself so that you can deal effectively with this unexpected change. The most important goal? To try to keep your overall financial plan as intact as possible.
If you are close to retirement age, you can explore your level of retirement readiness now. What if you are still some ways away or need more time to get your financial house in order?
Then it’s matter of looking for ways to have money coming in for the present.
You might plug into your social network for temp opportunities that make use of your professional skillset for right now. And while it might not be perfect, the gig economy can offer quick ways to generate some income for the time being.
On the other hand, there may also be a silver lining to this if you have a traditional IRA or qualified retirement plan. This could be an ideal time to convert your traditional balances to a Roth account, since your overall income will be less for this year.
This means that you will effectively be taxed at a lower rate on your conversion balances.
5. Gradually transition your portfolio from a growth to income focus.
Earlier in your career, you focused on saving and growing your money. Your financial strategy zeroed in on accumulation of savings and investment growth. But things change as you move closer to retirement. New planning becomes essential at this point.
The specifics of your financial strategy will ultimately be tailored to your goals, risk tolerance, timeline for your money, and situation. But a good rule of thumb calls for gradually shifting your portfolio from growth to more of an income focus for your retirement.
To help you prepare for replacing your earned income from your career with new income streams in retirement, you might consider ways to protect the assets you have today.
One option you might consider for your portfolio mix is a fixed-type annuity. This type of annuity can help you preserve your hard-earned dollars, and not just that. They can also pay you a guaranteed lifetime income in the future that might help overcome any retirement savings gap resulting from the current market.
Your financial professional can walk you through different options for protecting your money — and for creating dependable future income streams.
To Plan for Tomorrow, Start Today
These are just some of the steps that you can take to enjoy a secure retirement. Consult your financial advisor for more ideas on how you can maximize your income in these uncertain times.
If you are looking for a financial professional to guide you, help is just a click away at SafeMoney.com. Many financial professionals are available to assist you with your personal situation and goals.
Use our “Find a Financial Professional” section to connect with someone directly. You can request an initial appointment to discuss your unique goals, concerns, and financial situation. Should you need a personal referral, call us at 877.476.9723.