The end of the year is fast approaching, and that means the holiday season is upon us. It is a festive and exciting time of year. It’s a time for Christmas parties, spending time with family and friends, gift exchanges and decorations. It’s also a time for reflection.
Many people use the holidays to evaluate where they are in their lives. They think about where they are personally, professionally and even spiritually. Many also think about where they are financially.
Some people make the decision to retire; others realize they need to save more if they want to be able to retire.
Some people realize they better start planning for retirement or they will never get the opportunity. Most New Year’s resolutions are broken within a few weeks, but retirement planning should not be one of them.
Some of my clients over the years have made the decisions to retire during the holiday season. It is more common than one might think. The process that goes into planning to retire is quite detailed. An individual needs to do an assessment of his or her overall financial situation and answer a few questions:
How much money have you saved? Do you have enough saved to last you the rest of your life? How much money will you need to have the lifestyle you want? What expenses will you incur during your retirement years? How much will health insurance cost? Are you taking any major debts into retirement with you?
Once you get answers to these questions, you can determine if it is the right time to retire. Just because you want to retire, does not mean it’s the right time.
Some of my clients spend the holidays reviewing where they are on their retirement goals and realize they are not doing enough. How do you measure that progress? Start by determining what expenses you will incur during retirement years. Second, calculate how much income your retirement assets will produce monthly or yearly. That is the best place to start. Being aware of how inflation will affect your available income is another factor to consider.
There are several ways to gauge where you sit on your financial path. Retirement calculators are a great place to start. They can provide guidance.
Finally, there are those who realize they need to get started toward retirement. Life is not a dress rehearsal. We do not get to start over if we fail the first time.
There are legitimate reasons many people may find it difficult to start planning for retirement; however, the longer someone waits, the more difficult it will be to reach the desired goals.
Retirement planning should be like running a marathon. Ideally, you should be able to pace yourself and build retirement assets over many years. The longer a person waits, the fewer years there are to accomplish goals; and then, larger amounts of money will have to be added to avoid major market downturns. This plan can be very dangerous. At that stage, you couldn’t afford for anything to go wrong.
There is an old saying, “The best time to invest was yesterday. The second best time is today.”
As the holidays are upon us, it’s a wonderful time to be with family and celebrate the season. It should also be a time to reflect on where you are on life’s journey. Finding answers to these questions can allow you to have more confidence and peace about your financial future.
Marty Edge offers securities through LPL Financial (member FINRA/SIPC) and insurance products through LPL Financial or its licensed affiliates.