Retirement is not a single event; it's a journey. Each stage of it requires a different way of thinking about how you manage your resources. Consider where you are in your journey, and talk with a qualified professional about what you can do now to get the best mileage possible out of your resources.
1. Envisioning Your Retirement
Before you begin making concrete plans for your retirement, you should take time to consider what you want from it. What will you want to be doing? Where will you want to live? At what age would you like to retire?
After you have defined what your retirement should look like, weigh the costs of the lifestyle you desire and the basic needs you anticipate against your currently expected sources of income in retirement. Once you a sense of where you want to be and how far you have to go, you can begin to take practical steps toward your goal.
2. 20s and 30s
You are probably just beginning your career, and retirement seems a long way off. This, however, is the best time to begin saving. Putting away small amounts over a long period of time can add up to a comfortable income after you stop working. With the stability of Social Security and pensions uncertain in the long term, people in this age range have more reason than ever to prioritize retirement planning.
In these early years of your career, you can afford to be more aggressive with your portfolio and take greater financial risks. With many years ahead before retirement, you have time to ride out market fluctuations for long-term gain.
3. 40s and 50s
If you are at this stage of life and have begun to worry that you will outlive your retirement funds, you are not alone. With Social Security and pension income less reliable than in the past, many Americans in this age range are increasingly concerned that they have not been saving enough. Now is a time to maximize contributions while you are still working. Be aware that when you reach age 50, you will be eligible to make additional payments to your IRA or 401(k). Taking advantage of these “catch-up contributions” can help you make your future more secure.
At this time in your career, you likely have greater responsibilities and demands on your resources. Now is a good time to consider a growth and income approach to saving. Choose investments that will allow you to continue building capital while generating some present income as well. Speak with one of our professional advisors to craft a plan that is tailored to your needs.
4. 60s and 70s
Now that you no longer have the luxury of time to recoup losses, you will want to reduce risk in your portfolio. Your goal will be to hold on to the savings you have built and maximize the benefits you receive.
During this time, you will have to carefully consider your choices about Social Security. When and how you choose to collect your benefits will have a long-range impact on your finances. Be sure to fully understand the contents of your Social Security statement (available online at www.ssa.gov/mystatement), including the different amounts you are eligible to collect at different ages and the difference between collecting individual and spousal benefits. One of our finance professionals would be happy to sit down with you to discuss the costs and benefits of your options.
You will also need to decide how you will withdraw retirement income from your investment portfolio. Remember that higher withdrawal rates will profoundly affect the lifespan of your nest egg.
5. 70s and Beyond
Retirement is lasting longer than ever. Especially if you are no longer working, you will want to take special care to make sure your income lasts as long as you need it. Pay close attention to your withdrawals and expenditures, and keep in touch with your financial advisor to be sure your portfolio is being managed in the most effective way possible.
Each stage of retirement planning requires careful attention and knowledgeable decision-making. Contact us at our Des Moines office to tell us your vision of retirement. Our professional staff will help you set up a plan to get there.
Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.