Life-Proofing Your Retirement Savings
There’s no crystal ball that can predict life’s unexpected twists and turns. But when life changes hurt your hard-earned nest egg, shrugging and saying “c’est la vie” is not a viable solution. Luckily, we can always prepare for the unexpected — no crystal ball required. Let’s take a look at some common retirement planning setbacks and how you can life-proof your strategy. 1) Challenge: Caregiving and Multigenerational Support Solution: Review insurance and savings options for loved ones if they hypothetically became dependents. If a chance medical or economic scenario would make you responsible for a loved one’s needs, now is the best time to understand their insurance benefits, confirm how you’d access necessary funds, and review your coverage options for dependents (e.g. long-term care coverage). Doing so can allow you to identify gaps before they become financial responsibilities that could impact your savings strategy or increase your expenses in retirement. 2) Challenge: Recessions and Market Crashes Solution: Diversify your assets and reassess your risk tolerance. Portfolio diversification ensures your nest egg isn’t all in one basket and can mitigate risk in an economic downturn. As you near retirement, it’s also worth reevaluating your general strategy and considering more conservative investments that can weather the storm of market volatility with less drastic shifts in value. 3) Challenge: Divorce Solution: Store all your financial documentation for safekeeping and learn the rules and tax requirements regarding the division of assets in retirement plans. The idea of preparing for a potential divorce sounds pessimistic, but the costs of not doing so can be devastating. Proper research and documentation are small actions that help you and your spouse avoid expensive legal headaches and establish a “what if” strategy for secure retirement finances without shared assets and income. Is your nest egg life-proof? Reach out with your questions and concerns to get professional answers and bolster your strategy.
Maintaining a Healthy Money Mindset
It’s hard to find any good news about finance these days. Market forecasters are starting to use the dreaded “r” word to describe the economy and headline after headline is doom and gloom. A healthy wealth mindset can help you keep your eye on the prize even when the market flinches. You can always reach out to discuss more detailed ways to boost your wealth-building approach with deep industry knowledge. But for now, let’s go over the four key traits of a healthy money mindset. 1. Your Goals Are Organized (and Saving Is One of Them)You know your top three financial goals for the next year, five years and 10 years, and you can rank them by difficulty or priority. The action of saving is one of your goals rather than a means of accomplishing other goals, which helps you maintain financial flexibility. 2. You Keep a Pulse on the PresentYou’re proactive rather than reactive with your finances. Perhaps you regularly check in on key accounts or you keep tabs on the market factors that can influence them (e.g., interest rates, inflation), which lets you know when to re-examine your strategy. 3. You Take Time When Making Decisions No matter how big or small, it’s tough to make decisions under pressure. Those with healthy financial mindsets ensure their thoughts and feelings remain consistent by revisiting the topic at a later time, whether that’s in a few hours, overnight or next week. 4. You’re Future-FocusedIs your estate plan up to date? Have recent legislative or economic happenings increased future retirement expenses? With a healthy money mentality, you know that now is the best time to review these details to keep a steady path toward a bright future. Have questions about your wealth-building strategy? Reach out to get personalized answers.
Why Some Savers Postpone Retirement
Most people look forward to retirement. However, a surprising number of people find themselves hesitating to start their golden years -– or even “un-retiring” a few years in. There are several reasons why someone would hold off on retiring, and not all are financial. Learn about the main reasons people postpone their retirement and how to help ensure you retire without regretting it. Why would someone postpone retirement? Bad Timing The official minimum retirement age isn’t in our control. Unfortunately, sometimes you reach that age during a recession, high inflation or other unfavorable economic conditions. Even those who have built a sizable nest egg may feel it is better to wait for things to improve before tapping into their 401(k), IRA or other retirement savings so they can maximize their investments. Boredom The Japanese have a concept called “ikigai,” which translates to “reason for being,” and it’s something that many people struggle to rediscover when they stop working. Those who can’t find ways to feel productive may start to feel bored and restless, which inspires some retirees to “un-retire” and rejoin the workforce. How can you avoid retirement regret? If you’re approaching retirement, it’s important to have a clear understanding of your finances and your goals. The right age for you to retire might be completely different from the norm, and there’s nothing stopping you from holding off if the timing doesn’t feel right — the same goes for starting an early retirement. If you’re worried about feeling restless, there are plenty of ways to feel active and fulfilled. From hobbies to travel, there’s no shortage of ways to make retirement enjoyable. Also, consider activities that can provide a sense of purpose, like volunteering or part-time work. Want to discuss your retirement strategy? Get in touch today.
A Parent’s Guide to Supporting Young Adults
Economic factors are forcing many young adults to turn to their parents for continued financial support. Just last year, 58% of 18- to 24-year olds in the U.S. lived with their parents. As this trend continues, more parents are providing financial support that they didn’t plan for. In addition to the impact this can have on their own finances, many are unsure how to navigate support in a way that encourages independence. How can parents help set their children up for success as adults while balancing their financial planning needs? Discuss the “what-ifs.” What if your child loses their job? What if they need help once you’re retired? Even if you’re not supporting your child financially, consider these hypothetical scenarios and how you’d anticipate providing support. Share your perspectives. Ask how your child is approaching financial planning. Not only do these discussions help you understand how they’re doing financially, but they also provide an opportunity to share your insights and answer questions they might not know to ask. Outline your expectations. Setting expectations and boundaries can keep everyone on the same page and help nurture success rather than dependency. If your child moved back in, would you expect them to contribute to household expenses — and if so, how much? What kind of progress would you expect them to make in their savings or career while receiving your support? Find a balance. Your own financial goals shouldn’t be sacrificed in the process of (potentially) providing for your child. Find a balance through discussion and planning: For example, if your child is living paycheck to paycheck, partially assisting them now could provide the lift they need to build their savings and prevent financial setbacks for both of you later on. Financial planning can be tough in these uncertain times. Get in touch if you or your children would like expert guidance and insight along the way.
