Insights

Posted on September 29, 2014

4 Powerful Yet Simple Keys to Retirement Planning

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Published by Mike Schudel

There is clearly a disconnect happening in America: there is so much focus on retirement planning yet we hear stories and statistics that suggest many do not feel prepared for this important transition in their lives. Likely, this is a result of a number of factors including the overwhelming amount of information available, widely disparate views on how to plan for retirement and a focus more on the complexities of retirement planning rather than the essential basics. While many retirement plans require sophisticated solutions, I firmly believe every person or couple needs to start with basic yet powerful keys that will be instrumental in unlocking both a stable retirement and financial peace of mind.

1. Talk with your partner. Often.

Having a clear understanding and agreement of what your retirement will look like appears to be a prerequisite before retirement. But according to a 2013 survey of 5,400 U.S. households by Hearts & Wallets, only 38% of couples plan for retirement together.

While there can be some somber aspects to retirement conversations, it should generally be something enjoyable to discuss and plan for – and therefore something you will want to do often. You’ve worked your whole life for it! Discuss your dreams as well as your concerns early and often with your partner.  Over time, the two of you will be able to set expectations, gain predictability and build a secure retirement.

2. Know what to do with your retirement nest egg.

For most of your life you may have been accustomed to a steady, predictable stream of income. Upon retiring, you now have traded that income for a large, lump sum of money that needs to last the rest of your life: your retirement nest egg. It is easy to think such a large sum of money is nearly inexhaustible.  To avoid the temptation of overspending in the early years of retirement, be certain that you are prepared with a thorough budget.

3. Critically consider long-term care needs.

There are statistics claiming as many as 70% of people over the age of 65 will have a long-term care need with an average duration of 2-4 years and a cost of anywhere from $6000 – $20,000 per month in a full-time nursing care facility. Many retirees would quickly consume their savings at these cost levels.  Every retirement plan needs to address this essential key to retirement planning.

4. Know when to start receiving Social Security.

Social Security is a significant part of many retirees’ income. Starting your benefits before reaching Full Retirement Age will result in a permanent reduction of your benefits. Approximately 30% of all Americans start their Social Security benefits as early as possible – age 62 – limiting what they should be receiving. Before making any decisions on your Social Security, be certain to consider when you will truly need this resource and the best strategy for maximizing your benefits.

While there are many planning points and considerations for building a successful retirement, addressing these essential keys will help you unlock the retirement you’ve worked your whole life for!

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