Tips for Planning Your Retirement in Uncertain Times
Updated on Oct 15 2019
Retirement planning is not only more challenging in the 21st century as people need to be proactive to diligently plan their own retirement investments, but also can be unstable with volatile markets and uncertainty. Get tips for planning your retirement in uncertain times.
2019 is here and with it has come volatile markets, the longest government shutdown in U.S. history, and many more threats are on the horizon. It can make anyone question the future - especially the future of financial and retirement planning. The truth is that when things seem uncertain, retirement planning is more important than ever. Make a plan now to weather unexpected storms to be prepared in case of an emergency.
5 Retirement Planning Tips to Withstand Uncertainty
Here are 5 ways to help your retirement plan stand strong despite tumultuous markets, political upheaval and uncertain times.
1. Know where you stand financially.
You can’t know where you’re going if you don’t know where you are. Conduct a thorough financial assessment to understand where your finances are now in comparison to your retirement goals. How much are you able to save each month? Where are you spending your income? You may find that you are able to put more funds towards savings by cutting back on spending now. Or, you may need to refocus your retirement goals to meet your financial reality. Either way, understanding your current cash flow and retirement savings plan can give you a greater understanding of retirement finances.
2. Realize your retirement may last longer than you think.
People are living longer than ever and you may want to plan for a longer retirement, investing and saving more accordingly. Many people plan for their retirement to last for approximately 20 years. However, the Social Security Administration estimates that 25 percent of 65-year-olds will live to be 90 and 10 percent will live beyond age 95. Aside from the obvious costs that come with living long, plan for increased health care costs and even caregiving costs for aging parents.
3. Carefully consider when to retire.
To meet retirement goals, you may want to consider your retirement age. In fact, more people between the ages of 60 and 64 are working. In 1996, less than 46 percent of people between the ages of 60 and 64 were working. That number rose to 56 percent in 2016 and is expected to reach almost 60 percent by 2026. If your financial situation is not lining up with your retirement goals, or if the uncertainty of the times is making you nervous, consider working longer and investing more in your retirement accounts.
4. Know your income in retirement.
You may have a rough idea of where your income will come from after retirement but it’s important to conduct a thorough assessment of your retirement income. Consider how much you will receive from your pension, investment accounts, Social Security, and other sources of income. Do not forget to calculate any taxes that need to be paid on withdrawals or income tax that needs to be paid on Social Security and other retirement income.
5. Make individual decisions on your risk tolerance.
Decide for yourself and with your spouse, how much risk you are willing to assume for any and all investments. You may be fine taking risks with your money, risking a loss to gain more. Or, taking risks may make you uneasy. Either way, you will need to regularly re-evaluate your risk tolerance as retirement draws closer and you have less time for the markets to recover.
No matter how much you do to make your retirement plan strong, the future is uncertain. But, one of the best ways to ensure you have a solid financial plan is to meet with a fiduciary financial advisor. An expert financial advisor can be a trusted partner in your retirement planning and help you create a diverse, flexible, and reliable investment strategy to stand through tumultuous times.
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