A New Year and a Fresh Financial StartSubmitted by CADY Financial Services on January 17th, 2018
Have you thought about retirement this week? With the stock market closing at record highs, perhaps you are reviewing your year-end statement and admiring your progress with smiles all around. Or, maybe you are saying to yourself, "This is the year I will start saving for my retirement. I should have gotten started sooner." Whether your current job is horrible and you have a fine-tuned exit plan or you absolutely LOVE your job and plan to continue working well into your early 70's, everyone needs to be thinking about and planning for retirement. After all, the retirement phase of life can last 25-30 years, possibly longer, and you want to be prepared. Retiring early isn't necessarily a good choice if longevity runs in your family. Retiring too young may cause you to run out of money if you don't save enough prior to exiting the work force. Setting a retirement target age of say 65, 66, or even 70 could help you to keep working longer. Envision what your retirement will look like so you'll know what an average year may cost. Do you plan to travel the world or do you like simple activities close to home? Figure out your retirement lifestyle and determine the cost. The two biggest expenses retirees often face are healthcare related and taxes. Staying healthy and active can certainly lower your medical expenses during these years. Fewer prescription drugs may equate to more fun money and recreation time. Your tax expenses can be reduced by accumulating more money in tax-free accounts like Roth IRAs, Roth 401Ks, and Roth 403bs prior to retirement. With the Roth, when you take a distribution, you get to keep the whole amount when certain conditions are met (account open for five years AND the account holder has obtained the age of 59.5). Resist the temptation to delay saving for retirement -- the sooner the better. (Late teens and early 20's are ideal!) On the other end of life, resist the temptation to claim Social Security at age 62 particularly when longevity runs in your family. Taking the money sooner may be a poor choice for you as opposed to waiting to age 70. Financial fitness is about making good small decisions everyday. Here are some things you can do right now to improve your retirement: Consider the lives of the retirees you know and admire. How have their retirements gone? Who planned well and who didn't? What happened that was unexpected and how could they have been better prepared? Learn from their mistakes. Most retirees are happy to share life lessons with a sincere seeker. Continue to reduce your personal debt as efficiently as possible. Think long and hard before taking on new consumer debt. Resist the urge to keep up with the Jones. Chances are they're broke and stressed and who needs that? Save and invest consistently and automatically. If you are behind with saving for retirement, THIS YEAR is the time to start -- TODAY. Don't let another day go by without making a choice to improve your financial future. If you need help, reach out to a financial professional who can look at your situation objectively and help you come up with a personalized plan. It's not all work -- there is joy in the journey to retirement knowing you are doing the right things to be successful.