Retirement means different things to different people. It may be a time to take up hobbies you haven’t had time for, travel the world, or spend more time with family, especially grandkids. I once thought it would be fun for my wife and me to take a summer and follow the Chicago Cubs around the country, going to at least one game of every series they play and visiting the nearby sites on the other days. I even priced out what that summer would cost. It’s about $47,000, if you’re interested, which covers flights, rental cars, hotels, and 54 games counting the All-Star game, but not including the playoffs. While the cost is steep, the main reason I won’t be doing it is that my wife said she wouldn’t be coming with. If she doesn’t come, that would cut that cost nearly in half, so maybe it’s not out of the question? We’ll keep that on the list of possibilities for now!
Although figuring out what we want to do when we retire can be a hard task, the question most of us have is, “Will I be able to retire when I want to?” There are many things to take into consideration to answer this question entirely, but here are a few ways to give yourself the best chance to retire when you want to:
1. Take Advantage of Accessible Retirement Plans
In an earlier post, we talked about the different retirement plans that may be offered by your employer. If these are an option, take advantage, especially if your employer contributes matching funds.
2. Start Young and Try to Increase the Amount You Put Away Each Year
Take advantage of the power of compounding and start as soon as you can to put money into retirement accounts. When you get raises, increase the amount you contribute.
3. Utilize Retirement Calculators and Put Together a Plan
This doesn’t have to be some complicated plan. If you read our earlier post on budgeting and started keeping track of your expenses, you will have a good idea of what you need to live on for a full year. There are many ways to determine what you will need at retirement. A simple way is to take the amount you expect to need each year and multiply that by 25 to figure out how much you would need to retire comfortably. So, if you can live on $60,000 a year, you would need $1,500,000. From here, you can come up with a plan to reach that goal.
Utilizing a Retirement Calculator allows you to change different variables (interest rate, monthly contribution amount, the age you plan to retire, etc.) to see if you are on track or need to make changes. We utilize a program called Riskalyze that can help run different scenarios based on your actual investments, but there is also a simple calculator on our website that can help with basic calculations.
4. Review your Plan Annually
Remember, you are not a Day Trader. Markets will go up and down daily, but if you continuously move your retirement funds around by buying and selling your investments, you will lose out on the potential growth that comes with long-term planning. Visit with your Financial Advisor on an annual basis to make sure you are still on track to reach your goals and make necessary changes at that time.
To discuss other aspects of retirement to consider, please give us a call: