Are you ready to plan for retirement?

There are 7 factors that can negatively affect the quality of your retirement. With proper planning for these factors, we can significantly reduce their impact. Below we explain the dangers, reasons, and solutions for the 7 key factors that affect your retirement planning. My goal is to make sure you retire on your terms and feel empowered to live the life you have saved for over the years.

Reduction in Working Life Expectancy

When we talk about work-life expectancy, we are talking about how long you plan to continue to work. Some individuals have a defined date in mind. Others plan on working until they can no longer handle the workload. Few individuals plan their finances around these dates. A reduction in working life expectancy limits the number of years you can earn income to save for your retirement.

Dangers – Insufficient time to adequately save

Reasons – Shortened due to an untimely death, disability, health, or unemployment

Solutions – Life insurance, disability insurance, health insurance, education, training, and experience

Increased Retired Life Expectancy

We are living longer, which is a great thing. This allows us to experience more. But when it comes to financial planning this does pose a risk. When life expectancy increases, we also must plan to increase the amount of money we save for retirement.

Dangers – Living longer than your savings will allow

Reason – Increase financial needs and demands on current assets and income

Solutions – Make sure you have more than enough in retirement savings and have many levers to pull to offset the potential of an increase in life expectancy

Planning for Retirement Too Late

It is human nature to not worry about things until the last minute. Retirement planning is no exception. Most start retirement planning too late. This puts a burden on future years to accumulate enough savings to make sure their golden years are golden.

Dangers – Not taking advantage of retirement strategies that can reduce expenses and increase assets

Reason – Fewer years to take advantage of compounding interest

Solutions – Begin savings for retirement as soon as you can

Low Savings Rate

It is important that you save, but sometimes the amount that you save can be just as important. This is where a financial planner comes in. A financial planner can inform you how much you should be saving to reach your financial goals.

Dangers – Not knowing what, and how to save can cost you.

Reason – Saving too little too late

Solution – Plan your savings rate to meet your lifestyle needs in retirement

Inflation

The dangers of inflation can affect a lot of seniors who are on a fixed income. When income is set at a fixed amount and the cost of goods and services increase, this can put many retirees in a pinch.

Dangers – Running out of money

Risk – Higher than expected cost of living

Solution – Conservatively estimate inflation and your financial needs during retirement

Return on Portfolio is Inadequate

Being invested is only part of the journey. The investments you are actually invested in, are a different discussion. What you are invested in can significantly affect the types of returns you can expect.

Dangers – Running out of money

Risk – Returns on investments lower than expected

Solution – Work with a financial advisor to create an adequate asset allocation

Sources of Retirement

There are a plethora of ways to fund retirement. Understanding what they are and how they work together can help you plan for retirement.

Dangers – Lack of understanding of the options and sources of retirement income can hurt the quality of your retirement

Risks – Overestimation of social security benefits, private pension plan, or personal income

Solution – Conservatively estimate income from your retirement sources as well as monitor and project tax rates in the future