To live your dream retirement, you’ll need to have a strong financial foundation as you enter retirement. That’s why you may want to create a list of financial goals to achieve before you stop working. Your list of financial goals should align with your unique needs and goals. However, some items are nearly universal for a comfortable and financially stable retirement. Three such items are listed below. If you’re preparing for retirement, you may want to develop a plan to hit these milestones.
Are you self-employed? If so, you may be living your dream. You set your schedule, run your business the way you like and answer to yourself. You may even get to earn income doing what you love. While self-employment can be challenging, it can also be greatly fulfilling.
Self-employment can present unique challenges, however, especially when it comes to retirement planning. While traditional employees can participate in their employer’s 401(k) plan or pension, self-employed individuals have to do it on their own. That can be a significant burden.
Since you work for yourself, you may believe that you can delay retirement as long as possible. However, that assumption may be incorrect. There’s always the risk that you could be forced into retirement at some point because of illness or injury. Or you may simply decide you want to pursue other activities. Should that time arrive, you’ll be far more prepared if you have a plan in place.
According to a recent poll from Nationwide, 60 percent of small-business owners don’t have a succession plan in place. Among those without a plan, nearly half believe such a plan isn’t necessary.1
Are you among those without a plan? If so, you could be creating significant liability for yourself, your business, your employees and your family. A business succession plan helps you make a smooth transition to the next owner without disrupting business operations.
A succession plan also protects your interests. It helps you get fair value for your business and even retain some form of control or income. You can use your plan to identify the right successor and to make sure the next owner doesn’t deviate too far from your long-term vision.
Unfortunately, without a plan in place, you may be forced to sell your business to the best available buyer. That could mean accepting less than fair value or selling to someone who has plans for the business that don’t align with your interests.
You probably know a will is the most fundamental part of any estate plan, but did you know a will doesn’t have to be the only component of your plan? A will can achieve many things, including the distribution of your assets to the appropriate heirs. However, a will can’t do everything, and there may be some goals best accomplished through a range of other documents known as will substitutes.
Simply put, a will substitute is a document or tool that acts in place of a will in the estate-distribution process. A will substitute may apply to your entire estate or to specific assets. Some will substitutes are strictly estate-planning tools, while others are financial tools that can also be used for other purposes.
Do you need a will substitute as part of your estate plan? It depends on your needs and goals. However, if you want to pass assets on to your heirs quickly and at minimum expense, there’s a possibility a will substitute could be right for you.
Do you have a retirement strategy? For many people, retirement planning consists of contributing to their 401(k) plan or IRA every year. When you’re young and have many years until retirement, your strategy should focus on savings and asset accumulation.
As you get closer to retirement, however, you may want to think about more than just the dollars and cents of retirement. It’s important to save assets, but it’s also important to consider how those assets will be used when you leave the working world. That means planning your lifestyle and your activities during retirement.
Below are four questions you may want to ask yourself as you develop your retirement strategy. These questions can help you think beyond the financial aspect of retirement and focus on lifestyle, relationships and even your health. That could inform your decision-making as you approach retirement.
You’ve likely been paying into the Medicare system your entire career. If you’re approaching retirement, you’ll soon enjoy the benefits that come from all those payments. Generally, Medicare is available starting at your 65th birthday, although some forms of coverage may be started later.
Medicare was originally implemented to cover hospitalizations. However, other forms of protection have been added over time. Today, Medicare offers a robust menu of options and choices, each of which covers different services and comes with varying premiums, deductibles and copays.
Many new retirees are overwhelmed by Medicare options. However, it’s important to review your choices and analyze your needs. By choosing the right protection package, you can minimize the impact health care has on your retirement assets.
Are you one of the millions of Americans with insufficient life insurance protection? There’s a broad range of reasons why people carry less insurance than they need. However, the fact is an insufficient coverage amount could lead to financial difficulties for your dependents and loved ones if you unexpectedly pass away.
Below are a few of the common beliefs and myths that keep some people from purchasing additional insurance. Do any of these ideas sound familiar? If so, now may be the time to reassess your life insurance strategy and explore additional coverage options.
Worried that you won’t have enough money for retirement? If so, you’re not alone. According to a recent study from Gallup, retirement is a major worry for many Americans. The study found that 54 percent of respondents were worried that they won’t have enough money to fund their retirement.1
There could be good reason for concern. A study from the Economic Policy Institute found that the average American adult has less than $100,000 saved for retirement.2 While that’s a sizable sum, it’s far short of the amount many retirees need to live comfortably.
The good news is that it’s never too late to correct course and boost your savings. By making a few changes to your savings strategy, you could significantly improve your odds of funding your ideal retirement. Below are three tips to help you increase and protect your retirement savings:
Will you receive a pension payment when you retire? If so, you’re one of a fortunate few. Defined Benefit Pensions are quickly disappearing from employer benefit menus. In 1998, 58 percent of Fortune 500 companies offered defined benefit pensions, also known as “pensions”. By 2015 that figure was down to 20 percent.1
Many employers have eliminated their defined benefit plan in favor of defined contribution plans, such as the 401(k). In a pension, the employer funds the plan and is responsible for providing plan participants with retirement benefits. In a 401(k) and similar defined contribution plans, the employer may make some contributions, but the funding responsibility largely lies with the employee.
Pensions are helpful in retirement because they provide a guaranteed, predictable source of lifetime income. Even if you haven’t put much money away for retirement, you can still count on your reliable pension income after you leave the working world.
According to a recent study, Americans hold nearly $2.5 trillion in individual retirement accounts (IRAs), making the IRA one of the most commonly used retirement savings vehicles. Those nearing retirement, between the ages of 60 and 64, have an average of $165,139 in their IRA.1 If you’re like most Americans, your IRA will be a significant income source in retirement.
IRAs are popular vehicles largely because of their favorable tax treatment. In traditional IRAs and other types, such as the SEP and SIMPLE, you can deduct your contributions. All IRAs also offer tax-deferred growth. That means you don’t pay taxes on your gains as long as the funds stay inside the account.