Watch for These Red Flags In Your Retirement Plan
Worried that you’re behind when it comes to planning for retirement? You have company. According to a recent Gallup study, more than 50 percent of Americans are concerned that they won’t be able to fund their retirement. In fact, retirement is America’s No. 1 financial worry.1
The good news is it’s never too late to develop a strategy and take back control of your retirement planning. Below are a few red flags that may indicate you’re not as prepared as you should be. Do any of these sound familiar? If so, now may be the time to take action. A financial professional can also help you implement an appropriate retirement strategy.
Red Flag #1: You don’t know where your income will come from.
At its core, retirement planning is about creating enough income to fund your expenses and lifestyle. To meet your desired standard of living, you’ll have to generate enough income to cover your needs and also keep up with inflation. While you may be able to count on income from Social Security and even pensions, much of your income may have to come from your own personal savings and investments.
Have you created an estimate of your potential income? If not, it can be difficult to know whether you’re on track. You can obtain an estimate of your Social Security benefit amount from the Social Security Administration. If you have a pension, your employer should be able to provide a projected payment amount.
It may be more difficult to project income from your savings and investments, and many financial advisors don’t spend a lot of time addressing this topic. A qualified financial professional with experience in distribution planning can help you develop a savings and investment strategy and then estimate a reasonable withdrawal amount that you can take each year. Feel free to contact our office for a FREE initial strategy session where we can discuss your retirement income needs and design a strategy to help you meet your goals and make sure you are on track.
Red Flag #2: You don’t have a strategy to pay for health care.
Think Medicare will cover all your costs in retirement? Think again. Medicare is a valuable resource, but it doesn’t cover everything. In fact, you could face significant out-of-pocket expenses in retirement. Fidelity estimates that the average retired couple will spend $280,000 on out-of-pocket medical expenses.2
If you’re approaching retirement, now is the time to take steps to cover those costs. For example, you could fund a health savings account (HSA). You also may want to consider a supplemental Medicare policy to address gaps in traditional coverage. A long-term care policy may also be a wise decision, as Medicare usually doesn’t cover in-home assistance or stays in assisted living facilities. If you don’t have a plan, health care costs could blow a hole in your retirement budget.
Red Flag #3: You’re struggling with debt.
Debt is a problem for Americans of every age. However, it’s especially difficult for retirees. If you’re spending money in retirement on servicing debt, you may not have enough left to fund your desired lifestyle.
Now is the time to get your debt under control. Develop a budget and look for ways to pay down your debt quickly. Also, consider options to reduce your interest rate, such as a consolidation or even a home equity loan. If you can eliminate debt before retirement, you may find yourself on more solid financial footing during your golden years.
Ready to eliminate the red flags in your retirement plan? Let’s talk about it! Contact us today to request a FREE initial retirement consultation. We can help you analyze your needs and implement a strategy that avoids these red flags.
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