Trending
By Theresa Bedford
Wealth of Geeks
Between scientists predicting even more COVID-19 variants on the way, inflation concerns, and market uncertainty, baby boomers are concerned about retirement. A recent survey by Personal Capital and Empower found that economic confidence and financial health were down across all age groups in 2021. However, those aged 55-64 were the most financially hurt by COVID-19. Despite declining confidence and financial health, Americans as a group are prioritizing paying off debt, saving for retirement, and losing weight. So, optimism and hope remain high.
Find someone
to talk to
Alex Lynch, a certified financial advisor at Jarvis Financial, says, "the time period immediately before retirement is one of the scariest but most critical planning periods to having a successful retirement. There is uncertainty everywhere. It can feel as if all the 'powers to be' have stacked the deck against you." You may never feel as if you have enough money. However, information is power. Putting the pencil to paper, diagnosing your finances, and knowing where you stand can be freeing. Alex recommends gathering your social security benefit estimate as well as your pension, 401k, and other retirement account balances. Then determine how much you need to make your lifestyle work.
Make a Plan
Clayton Wood at Wood Financial LLC recommends asking yourself two questions:
1. How much annual income do I need to retire?
2. How much do I need to save to complement that income need?
It may sound elementary, but it's fundamental.
Most Americans retire with two income streams: social security and investment income. Clayton recommends creating an annual budget then subtracting your projected social security benefit. You can safely plan to withdraw 4% of your total investments annually without running out of money in retirement. With this rule in mind, you can calculate your savings goal by multiplying your excess budget and social security payment by 25. Now you have a starting point.
Start saving
It's never too late to start saving. As a near-retiree, you still have time. Nick Bormann, a financial planner at Bormann Wealth Management, recommends aggressive savings. Upping the savings rate can be a power play for people close to retirement. It adds extra padding to the retirement egg and controls living expenses for today. Reducing your costs by saving more today makes scaling back easier in retirement. As for specific investments, Nick suggests that your investment portfolio includes both defensive and growth stocks. We're living longer and longer, and as such, we need a portfolio that will keep pace with a rising cost of living.
Remember, there
is hope
Near-retirees may feel less confident about retirement, but there's hope. It's not too late to prepare for retirement. Arm yourself with knowledge, understand your financial situation, and make a plan.
Retirement today doesn't necessarily look like the retirement of the past. Today, it's what you make it. So, perhaps you look at retirement as an opportunity to start a business or side hustle, work as a consultant or turn your hobby into extra money. Maybe you increase your rate of savings and learn to cut costs today. It's your retirement.
Remember, it's just that -- your retirement. So enjoy the journey to get there for yourself.