How To Pursue A Regret-Free Retirement
By Bob Hanna
It shouldn’t shock you to hear that regret is a part of life. In fact, I’m pretty confident you have often learned from your past regrets to make better choices going forward. However, when it comes to retirement, there are no do-overs. Once you pack up your office for good, any mistakes you have made in your preparations are much harder to remedy—but not impossible. If you find yourself in this situation, the good news is that as long as you are open to learning from others, you still have a chance to secure a fulfilling and comfortable retirement. Take a look at the following tips to help you work toward a regret-free retirement.
1. Save Early And Often
Many people, 55% according to a Global Atlantic Financial Group study, (1) enter retirement and discover several things they wish they’d done differently. And the number-one regret? Not saving enough. One of the ways to make sure you have the nest egg of your dreams is to save early and often. While it may be tempting to hold off on saving until the kids are out of the house or until you are more established in your career, do not. The longer you hold off saving for retirement, the harder it will be later on.
For every year you delay in saving, you’ll have to contribute exponentially more to reach your savings goals because of compound interest. If you start saving $400 per month at age 25, you would have $1 million saved by age 65 (assuming a 7% annual investment return). If you do not start until age 35, you will have to save around twice as much to reach $1 million by age 65. Make it a priority to save, even if it seems like a small amount, and you will be on your way to avoiding this regret.
2. Set A Realistic Retirement Spending Plan
A common retirement misconception is that you will not need as much money in retirement as you do now. You may think that you will not have a mortgage in retirement or that you will not be supporting your kids anymore. And while your expenses will change, that does not mean you will have fewer expenses. For example, healthcare costs can put a serious dent in your retirement savings. It is estimated that the average couple will need an average of $285,000 to cover medical expenses in retirement, and that is often more than people have saved for retirement overall! (2)
To make sure you do not underestimate your retirement needs, develop a clear picture of what you want in retirement and track your spending now so that you know how much retirement will cost. The key takeaway here is to create a retirement saving and spending plan specific to your lifestyle and your needs. While the general rule of thumb is that you will need 70-80% of your pre-retirement income to live on in retirement, that number may be more or less for you. Work with a professional to create a customized strategy so you are not scraping pennies together later in life.
3. Create Multiple Income Streams
Social Security is an important piece of your retirement income plan and you should create a claiming strategy to maximize your benefits, but did you know that the Social Security program was designed to replace just 40% of an average worker’s wages? (3) In other words, you’re going to need more than just Social Security to get through retirement.
Take stock of the tools available to get you to your retirement goal. What income sources do you have? This could be anything from IRAs to 401(k)s to pensions to annuities, even rental income or taxable brokerage accounts. It is important to analyze your alternative income sources and incorporate them into your overall retirement strategy.
4. Set Retirement Expectations
When it comes to retirement planning, a common mistake is to only focus on the financial side of things. Sure, it is great if you have enough money saved, but you cannot enjoy your retirement if you are not fulfilled. Most people find their identity in their careers, and when their career ends, they do not know what to do; they lose their feeling of purpose. Make a plan for your time in retirement so when you leave your job, you have something to look forward to. It could be travel, hobbies, volunteering, time with grandchildren, or even volunteer work. The important thing is to determine what your next step is going to be.
Experience A Fulfilling Retirement
We at Retirement Wealth Strategies, LLC understand the challenges that come with deciding when and how to retire, but you do not have to make the hard choices on your own. In fact, finding out what your ideal retirement looks like and working with you to make it a reality is our top priority. No matter the path you’re currently on, it is possible to enjoy your retirement and feel confident in your future. Contact us for a free 30-minute retirement analysis to see if we’re the right fit to help you secure your regret-free retirement. We look forward to hearing from you!
Bob Hanna is co-founder and financial professional at Retirement Wealth Strategies, LLC, a comprehensive financial services firm dedicated to helping pre-retirees build and preserve their wealth. With over 25 years of experience in the financial industry, Bob is passionate about equipping his clients with a plan that mitigates risk and creates a lifelong income stream. Bob holds a degree in business from Bowling Green State University and a secondary degree in education. Outside of the office, he is an avid cyclist and competes in events all over the country. Bob enjoys spending time with his wife and five children and currently resides in Bexley, OH. To learn more about Bob, connect with him on LinkedIn.