The Perfect Retirement Plan With These 6 Tips.
Are you one of the millions of Americans who is looking for the “Holy Grail” of the Perfect Retirement Plan? Then you are not alone but it is going to take solid planning on your part. If you are in a committed relationship that complicates things even further. Here are 5 Tips to help make your dream of a perfect retirement plan a reality.
Tip #1: Having an Open, As Well As, Honest Discussion Is Important
Well before you get engaged, you should discuss money and what your views on money management are. This will avoid problems down the road. If you haven’t done that, STOP, have that discussion and then continue reading. It is never too soon or too late to create an understanding of how each of you view money.
If you say, we did that, my question is “How long ago?” People’s attitudes change based on how their lives and how things have gone. You should discuss these feelings at least on an annual basis.
You should ask each other what do you want and expect from retirement? This might sound like a question with an obvious answer “An Easy LIFE” but it really isn’t that simple. That can mean different things to different people. Some people want to work part-time and some not at all. Some want to take up a hobby, others want to spend more time with family. There is no right or wrong answer, we have different ideas.
It is important to understand what each of you want to live a happy and full retirement. This is easier to understand and discuss before you retire rather than after. The problem is most people never think it through and end up having issues about retirement that they never thought would come up. Studies have shown that 8 of 10 people discover in retirement that they have nothing in common with their spouse or partner. The differing goals and desires create a stain on the relationship emotionally and financially. In 13% of the participants, this stain ended the relationship, 40% had to learn to live with one another all over again, while another 29% said that retirement didn’t meet their expectations.
The best way to avoid this is to have the discussion long before you retire.
Tip #2: Attempting To Implement Your Plan Without Professional Help Is A Mistake.
Most make the mistake of simply avoiding planning. Many times, this is because they are embarrassed to reveal their problems to a stranger. They feel that they are alone in their mistakes. This isn’t the case. Most people are not naturally adept at retirement planning anymore than they would be at medical issues, problems with their car etc., it pays to seek professional advice.
This doesn’t mean that you can’t start by sitting down and putting your thought together alone. This is a great starting point. You can use books, videos and the internet to help you get started. You don’t necessarily have to pay professional fees to meet face to face. There is plenty of information available to help you get started. After getting your ideas down on paper, it could be helpful to sit down with a professional who can review your plans and then possible help with the implementation.
Tip #3: You Should Have A Retirement Team
While both of you being involved is important, in the end this will not be enough. Planning for retirement is going to be a team effort, even if were 100% successful in the first two steps, it won’t be enough.
Most people will fail during the implementation stage. When you attempt to monitor progress, adjust and stay on track while living your life something will have to give. That usually means that your retirement will suffer. The tendency will be to fall back into your old habits. You need a team that can help you stay on track or guide you back when you go astray.
Your team should have one main person who coordinates all the different aspects of your plan. The team should consist of an attorney, an accountant or CPA, insurance professional, investment advisor and banker. One of these professionals should be the quarterback, coordinator etc., of the team. This person should be the one who you trust the most. They should be present at all meetings and have access to all your information. Many times, team members might fill multiple roles. Getting references or referrals from others can also help in picking your team members.
I would suggest meeting with your team or at least the team coordinator quarterly. You however should have access to all of them via phone or email. While plans should have a long-term component to them, there are times when things change unexpectedly, and you must be able to adjust.
Initially there might be friction within your team. This is because all these professionals have a different approach to solving the same issues. You might have to replace some team members until you find a group that will be able to work together in a fashion that you are comfortable with, this is to be expected. These professionals work for you. Their plan should fit your goals, investment risk tolerance and approach to money.
Working with your team should enable you to have a plan that is detailed and specific while being flexible so that you can adjust as your life changes. This doesn’t meat that it will be easy and won’t take some changing on your part, but you should be comfortable with the process. In the beginning, it will take some getting used to but over time it will become easier.
Tip #4: Funding Your Retirement Has To Come Before Anything Else.
Funding your retirement doesn’t mean that enjoying life today must stop but it does mean that you must set priorities. You might watch more TV, rent movies at home and cook instead of going out to the movies and eating out at expensive restaurants.
If you have been successful at the prior 4 steps you should feel ok with spending some money to enjoy life. This is because you will put enjoying life today in the proper place with preparing to enjoy life in the future. You will know what you can and can’t afford.
Sitting down with your team and determining what will fit in your budget, putting preparing for the future first. This will give you the freedom to enjoy the extra money without guilt.
Balance is the key to a successful retirement plan. “Nothing in excess” is a great motto for this portion of your retirement plan. A financial plan that is too strict and doesn’t allow you to enjoy life now will be something that you won’t sustain. A plan that is too loose and has no set allocations is also doomed to failure.
Tip #6: Don’t Worry About The Joneses.
A common mistake that many people make is to compare themselves to others around them. This is a huge and possibly retirement plan killing mistake. Those around you are not you. No two couples are alike and to attempt to match what others are doing just doesn’t make sense.
There are so many factors that go into a retirement plan that it is impossible to think that you will have even a few factors in common. We are make different incomes, have different debt levels, want different things in retirement, have different risk tolerances etc., the mixtures and combinations of possibilities are endless. There is also the possibility that those around you are overspending to maintain a lifestyle which is a path to disaster. From the outside looking in, it seems that you should be able to afford everything that they have when in fact they can’t afford their lifestyle.
It is better to decide what is important to you and your situation, create a plan and stick to it. Don’t others who don’t have all your information and who you don’t know everything about take you off track.
That is our list of 6 key tips to help you in your search for the perfect retirement plan. If you take the time to complete each step properly we are confident that you will have a retirement which will be enjoyable and successful based on your definition of success.