Do you have trouble envisioning your retirement? Are you realistic about both your current budget and future retirement expenses? Do you even know where to start when it comes to saving for retirement? These are all classic traits that can impede your retirement success.
The good news is that you can change your approach to retirement. Jennifer Myers of SageVest Wealth Management was recently quoted in US News and World Report and we offer five quick questions about saving for retirement, and the benefits of working with a financial advisor to achieve your retirement objectives.
How Much Do I Need To Retire?
Whenever we get asked this question (which is often!), we always respond with, “It depends…” The reality is that everyone’s lifestyle is different. One person might be able to live off $3,000 per month, whereas someone else may need $20,000 a month. Thus the amount you need to save for retirement can vary significantly from one person to the next.
How Do I Get Started Saving For Retirement?
SageVest Wealth Management always begins by evaluating your lifestyle today; specifically, how much you’re spending.
The reality is that if you ask someone how much they spend, 9 times out of 10, their answer’s wrong. Very few people track all their spending and know their ‘real number’. Furthermore, most people focus on recurring monthly expenses, which typically account for only a portion of their real budget.
We therefore advocate a much easier but still fairly accurate approach to determining your current spending:
* Your total income for the year includes not only earnings, but also bonuses, tax refunds, gifts, etc.
Using this calculation, if your income didn’t go to savings or taxes, you spent it.
Of course, we can also dive deeper to analyze financials in greater detail. However, most clients appreciate this less invasive approach.
Why Am I Not Saving As Much As I Had Planned?
Life tends to be more expensive than we plan for, and virtually everyone faces unexpected costs at some point throughout the year. However, few people learn to budget with foresight.
We monitor actual, not projected, spending on a recurring basis, helping to establish baselines and recognize trends that give you a better sense of your true financial needs and how they relate to your financial preparedness.
If large expenses keep derailing your savings for retirement, we can help you identify where to cut back, allowing you to accommodate life’s unexpected costs and still plan for retirement.
Conversely, if you’re ahead of the game, it might mean greater opportunity for you and your family, or the ability to retire early.
How Frequently Do I Need A Financial Plan?
Very few people can say their lives turn out exactly as they expected. In our eyes, financial planning is an ongoing initiative that must evolve alongside your changing life circumstances. That’s why your retirement planning should ideally extend over several decades and be revisited frequently to reflect:
- Your current lifestyle
- Decisions you’re contemplating
- Potential future life events
SageVest Wealth Management always analyzes a number of ‘what-if’ scenarios in our financial planning exercises with you. These can help evaluate considerations like:
- What if my spending is higher or lower?
- What if I retire early or work for longer?
- What if I downsize my house or relocate?
- What if I need to pay for a wedding?
- What if I have long term care needs or other medical expenses?
- What if one spouse prematurely dies?
Looking at a variety of scenarios helps you gain a sense of what impacts saving for retirement, and what doesn’t. In turn, this knowledge equips you to make informed decisions, day-by-day and year-by-year.
How Do I Save For Retirement While Enjoying Today?
Just like most things in life, financial decisions involve balancing your options and prioritizing objectives, so that you can focus on what’s important today and also what’s important tomorrow.
Once you’ve identified authentic spending figures and realistic saving objectives, for most people, the next most prudent step is automating your retirement savings wherever possible. Set up recurring contributions to your retirement plan and/or investment account to remove temptation and encourage conscientious saving.
Start planning for the future and saving for retirement at a pace that suits you. Follow these steps; check out US News and World Report’s ‘5 Behaviors That May Be Hurting Your Retirement,’ which quotes Jennifer Myers of SageVest Wealth Management; or contact us. We’re a top ranked, fee-only financial advisory firm that renders highly personalized wealth management services to clients and their families. We can help guide your financial decisions, relative to personal and family objectives, and formulate smart, practical actions designed to help you maximize today while planning for tomorrow.