Successful Retirement Planning: Five Crucial Components

Focus on the Fundamentals to Establish a Retirement Plan that Meets Your Needs
Kathy Longo, CFP®, CAP®, CDFA® Monday, 03 February 2020

Successful Retirement Planning: Five Crucial Components

When you think of retirement planning, are you immediately overwhelmed? Whether it’s the thought of balancing all your financial priorities, concerns about being behind in your savings or confusion about where to start, you’re not alone. In fact, 52 percent of Americans aren’t properly planning for their retirement years.

Of course, there’s no time like the present. If you’re ready to begin planning for the retirement of your dreams, get started by focusing on the five components below.

1.    Preferred Lifestyle

These days, the average retiree can expect this phase of life to last two or three decades – how do you plan to spend these years? It’s worthwhile to think about where you’d like to live, the sorts of hobbies and experiences that will fill your days and who you plan to spend your time with. You should also think about what age you want to retire and whether you want to stop working cold-turkey or phase-in your retirement slowly. It’s also worth reviewing your finances to determine whether working just a few more years than planned may make a big difference in your retirement savings.

2.    Sources of Income

So, how will you pay for this dream retirement lifestyle you’re imagining? If you’re lucky, you may still work for a company with a traditional pension, though they’re few and far between these days. More than likely, you’ll have to take matters into your own hands by utilizing tax-advantaged accounts like 401(k) plans and Roth IRAs. There are many options available to today’s workers, so educate yourself or seek out the advice of a certified financial planner so that you can think ahead about preparing for your financial future.

3.    Willingness to Take Risks

Smart investing is crucial to retirement planning, but it always comes with some level of risk. As you consider your investment options, you’ll need to understand your risk tolerance and invest accordingly. Diversifying your asset allocation is one way to lower your overall risk, but the most advantageous investments sometimes require a higher tolerance for risk. Think about how much control you’d like over your assets and where they’re best allocated in order to meet your comfort level.

4.    Health Needs

Do you have a plan in place for who will care for you and/or your spouse as you get older? If not, you should start to make one. Health care often proves to be a major cost to retirees. Planning ahead for your care ensures your wishes are met, and it also protects your loved ones from having to make difficult decisions on your behalf. One of the best ways to make sure your expectations for your care will be met is to maintain a long-term care insurance policy. This can help cover expenses while also protecting your assets.

5.    Expert Guidance

If you’re serious about retirement planning – and you should be – you should meet with a financial advisor. Choose someone who takes the time to answer your questions and address your concerns about retirement, is committed to keeping your needs as their top priority by serving as a fiduciary, and who truly understands your long-term goals. Retirement planning can become complicated and it behooves you to have a trusted expert to help ensure you remain on firm financial footing.

It’s never too late to begin planning for your retirement, though it can become more difficult the longer you wait. If overwhelm about the process has kept you from making progress, focus on the five simple but crucial components above and begin taking action today.

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About the Author

Kathy Longo, CFP®, CAP®, CDFA®

Kathy Longo, CFP®, CAP®, CDFA®

Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.

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