If you’re part of Generation X, you might think there’s nothing to be done about retirement: You’re either ready… or you’re not.
In fact, nearly 40% of your peers already feel like they’re in the latter camp, and won’t be able to afford retirement.
But, whether you’re sitting on a fat nest egg or haven’t saved a cent, don’t underestimate the importance of these next few decades. The moves you make from now until retirement will likely have a huge impact on your golden years.
So no matter what’s happened in the past, if you’re in your mid-40s to mid-50s, you should take these six retirement planning steps today.
1. Evaluate Your Financial Roadmap
Though you hopefully did this many years ago, it’s time to take another look at your financial roadmap. With your spouse or advisor, discuss issues like:
- How much longer do you plan to work?
- Will your house be paid off?
- What do you want your retirement lifestyle to look like?
- How much money might you need?
- What types of income sources will you have?
Think about your health, too, and consider whether long-term care insurance might make sense.
By first talking about your goals and plans, you’ll be better able to predict your costs — and therefore determine how much further you have to go.
2. Reassess Your Risk Tolerance
After clarifying what you want out of retirement, and how many working years you have left, it’s time to address your risk tolerance (the amount of risk you can withstand when it comes to your investments).
Generally, the longer you have until retirement, the more risk you can take, and the closer you get, the more conservative you’ll want to be. Remember, however, you won’t need your entire portfolio the second you retire, so you can potentially allow for more risk than you’d think.
Once you determine your risk tolerance, you may want to rebalance your portfolio to match it. Riskier portfolios usually carry a higher percentage of stocks, for example, while conservative portfolios carry more bonds.
3. Think About Your Family
If you’re a Generation X-er, you might be helping your children with college costs, and perhaps also helping your parents with their estate planning or financial needs.
In other words? You’ve got a lot of people counting on you. Which is why it’s essential to have an updated will and estate plan.
Make sure the beneficiaries on your insurance policies and investment accounts are up-to-date, and that you’ve clearly stated your wishes in a (signed!) will.
4. Pay Yourself First
Your 50s are often the best last decade to earn (and invest) a solid income.
So live within your means, and save as much as you can. Though it might be tempting to keep up with the Joneses, realize the Joneses may have a lot of debt — and not a lot saved.
To make investing easier, you can employ a strategy called “pay yourself first.” All this means is you’ll put money toward your retirement accounts before doing anything else. You can even use an automatic transfer to make this require zero effort.
Bonus? You won’t need to budget each and every dollar that goes out, because the most important account will already be funded.
5. Create Future Cash Flow
Though this step isn’t vital, it can certainly prove to be fruitful. Turns out that many Americans don’t enjoy retirement as much as they thought they would, and often return to working in some capacity.
If you want — or have — to do some paid work in retirement, consider laying the groundwork now. Maybe you can take a few consulting clients on the side, hint to the museum director that you’d eventually love a part-time gig, or start taking classes to develop a new skill.
6. Hire Professional Help
Getting ready for retirement — especially when it’s only a decade or two away — requires way more information and forethought than one blog post can reveal.
So, if you don’t already have a financial advisor on your side, it might be time to hire one. Look for a fee-only financial advisor, as they don’t earn a commission and are legally required to keep your best interests in mind.
Here at McClain Lovejoy, we’re proud to offer our services on a fee-only basis. That means we don’t sell products, have no hidden agenda, and have only one boss: You. We simply offer honest and effective advice. We do things our way, enabling us to focus solely on your best interests, without restrictions.
We are also fiduciaries, which means that as CERTIFIED FINANCIAL PLANNERS™, we have taken a Fiduciary Oath, and are legally bound to put your best interests first, not ours. We believe this is a basic right every client should be afforded, and take this very seriously.
If you’d like to chat with us about how we might be able to help you take a different approach to finance, we offer a free 45 minute introductory meeting, where you can learn about us, and we can learn about you. Contact us to schedule an appointment.
By making the most of your 40s and 50s, you’ll soar into your 60s — and the golden age of retirement — with fewer worries, and more time spent doing the things you really love.