When we think of retirement, we think of our grandfathers and grandmothers. Their employee benefits included pensions and investments that were managed almost solely by their employers. They stopped working at the age of 65 or earlier, and then to us it seems they went off and had the time of their lives with hobbies, causes, friends, family and lots of relaxation.
It’s still possible to retire that way. However, the lay of the land for retirement has changed. We have become more responsible for our own retirement planning and investments. Some of us won’t retire as early as our grandparents did. Many of us have lost a good chunk of our retirement money to recent economic problems of the world. For all these reasons and more, we need to change the way we approach retirement.
In this new economic environment, the key to successful retirement is planning, more than ever before. It’s important to work with a financial advisor, such as Midlands Financial in Lincoln, Nebraska, to create a plan early in our working lives and follow through as much as possible. Even if we’re getting a late start, a financial advisor can help us create a plan that will make it more likely we live a retirement life that suits us.
Basic Retirement Planning Approach
Your financial advisor will help you sort out the details, but the following basic ideas should guide your retirement planning.
1. First, determine your current standard of living. This involves knowing exactly what you’re bringing in and spending money on now. Create a budget showing both income and expenses. Take it one step further and identify which expenses are necessary and which are discretionary. This will help you determine which expenses will be critical in retirement and which could be considered optional.
2. Decide whether you want the same standard of living when you retire. Retirement is not just a matter of money, it’s also a matter of quality. If you want a higher standard of living when you retire, you might need to invest more money now. If it’s not critical in retirement to have the same standard of living you do now, you might be able to invest less and use more of your money now.
3. Create a retirement budget. With the help of your financial advisor, write a budget projecting your needs for retirement. This is likely to be different from the budget you use now. You might not have as much a need for travel expenses, for example, because you won’t be working every day. On the other hand, you might need more money for medical care. Again, look at both essential and discretionary money to help you form a realistic retirement budget.
Everyone’s retirement needs are different. Let your financial advisor help you create a plan that fits you, so you can look forward to retirement just as much as your grandparents did.
Securities and investment advisory services are offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC and Midlands Financial Benefits are not affiliated. Additional products and services may be available through Midlands Financial Benefits that are not offered through AIC.