Looking Towards Retirement: Steps for Retirement Success
To have a successful and secure retirement, you need to ensure that you have a solid financial foundation to fund it. Planning your retirement is a multistep process that can get complicated if you don’t have specific outlined steps or goals. After you’ve outlined your goals, you can then decide on the types of retirement accounts and portfolios you can use to grow your retirement fund. Other steps you should take to build a successful retirement include:
- Determine spending needs
- Take stock of all assets
- Determine when to collect Social Security
- Start estate planning early
Determine Spending Needs
Similarly to how you would regularly budget your income, determining your spending needs for when you’re retired is key to having a big enough nest egg to support the kind of lifestyle you want to live. Having realistic expectations about your future spending habits will help you define your savings goals.
Many people think that during retirement, they’ll only spend around 70% of what they did before retirement. However, this assumption can be unrealistic, especially if they have a mortgage to pay, unexpected medical bills, or splurge on travel. It’s best to assume you’ll spend closer to 90% or even 100% of what you did pre-retirement — if you don’t end up spending all that you budgeted for, you just can save the rest for a rainy day.
Take Stock of All Assets
While people usually account for their income, personal savings, and retirement account savings, nontraditional assets can sometimes be forgotten. If you have a lucrative hobby or skill, like collecting vintage comic books or composing music, you can turn them into income for your retirement years. Make a list of all your hobbies and skills, and maybe even try to think of some new ones that might bring in some extra income. Some money-making hobbies you may want to start include:
- Flipping houses
- Crafts and DIY
Determine When to Collect Social Security
Most retirees don’t save enough to be completely financially independent for the rest of their lives. Social Security benefits are usually needed to help them pay for basic needs as well as traveling and other fun activities. Social Security replaces a percentage of your pre-retirement income based on your lifetime earnings. The amount that Social Security replaces varies based on how much you earn and when you choose to start collecting benefits.
The age that you start collecting benefits will impact how much you receive monthly. You can start receiving benefits as early as 62, but the amount you receive will be reduced if you’re not full-retirement age, which is 67. If you wait later than age 67 to claim, you’ll be eligible for delayed retirement credits — these give you an increase in benefits each year until you reach age 70. Determining what age you’ll need to start collecting social security is an important step in creating your successful retirement plan.
Start Estate Planning Early
Another step in planning a successful retirement is to start thinking about estate planning. While it may seem too early to start making any major moves in this area, having a well thought out estate plan ensures that your assets are distributed to your liking and your loved ones will not experience financial hardship. Estate planning can become complex very quickly, so it’s important to consult different field experts, such as:
- Tax advisors
Plan Your Retirement with Carty & Company
Carty & Company is here to help clients who want to control their financial destination and decisions but want an experienced and knowledgeable right-hand person’s guidance. If you’re interested in learning more about or need assistance with building a retirement plan, contact us today!
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