Uncertainty surrounding the economy and market volatility can thwart retirement planning efforts, yet there are ways to address them.
An emergency fund can serve as a buffer during volatile economic times and help avoid tapping into long-term savings accounts. Another strategy involves adopting a time-segmented bucketing approach that aligns pools of assets with different stages of retirement.
Inflation can eat away at savings accounts, especially those further from retirement. Increases in food, housing and utility costs make saving harder in everyday life.
Informing participants of the effects of inflation can assist them in planning ahead, including access to TDF series or managed account offerings that incorporate real asset exposure in their portfolios to protect against inflation.
An annuity may provide an alternate source of retirement income in times of economic uncertainty and can help retirees and pre-retirees offset inflationary effects. A financial advisor can assess each participant’s unique situation and offer strategies tailored specifically to them.
Retirement planning refers to the financial process of saving, investing and ultimately dispersing funds in order to sustain retirees through their lives. Common investments vehicles for retirement planning are individual retirement accounts (IRAs) and 401(k) plans; professionals specializing in retirement planning collaborate with individuals and small businesses alike in devising future-planning strategies which balance professional with personal life goals.
Retirement has changed over time as lifespans increase, from marking the end of paid work to becoming a period that includes additional activities that supplement or replace income. This is particularly relevant for those without defined-benefit pensions or savings but also applies to people who simply need something to keep them occupied during this period of their lives.
Some retirees choose a second career path by volunteering for their favorite cause or consulting in their former field of expertise. Others take part-time jobs that allow them to remain actively involved with their communities such as walking dogs or volunteering at local animal shelters.
As you approach retirement, it is crucial that you carefully consider your lifestyle. Living expenses could include housing and utilities bills as well as health care costs; transportation should also be factored into this equation if it plays a major part of your work life.
Inflation can erode the purchasing power of your savings, so it is wise to prepare for inflationary trends by investing in assets with proven track records that outstrip inflationary trends. You should also consider alternative sources of income in retirement such as an annuity that provides guaranteed income or long-term care insurance policies.
Financial planners typically advise individuals and families to plan to replace 80% of their preretirement income in retirement, but every situation differs. Lifestyle, travel plans and health concerns all can have a direct impact on what will constitute necessary living expenses; to account for them appropriately when creating your budget.
Remind yourself that market volatility and economic uncertainty are to be expected; keep an eye on the long-term goals set forth for your retirement planning goals to ensure optimal success.
If you have invested in a well-diversified portfolio that features stocks and bonds in equal proportion, the returns from your investments should cover most or all of the anticipated expenses of retirement. Furthermore, it is crucial that you understand any tax implications regarding withdrawals and take advantage of any tax-advantaged retirement accounts available.
If you plan on postponing retirement, reducing nondiscretionary or essential expenses to ensure they align better with any guaranteed income (if any). This will help avoid potential shortfalls should markets decline significantly during your retirement years. Furthermore, moving to an area with lower costs may help stretch out your retirement savings further.