The New Normal Retirement
As we know it today, retirement planning is thought to have existed only a few decades ago. Previously, people worked until 65 and then retired on a pension plan. As life expectancy and the number of years spent in retirement increased over the next few decades, financial professionals developed accessible parameters to predict how much you would need in retirement to maintain your lifestyle.
Some of the most prevalent retirement "rules" you may have heard originated here. And while these suggestions may have worked for many people in their 70s and 80s, they are unlikely to apply to today's retirees.
It's no longer your grandparents' retirement.
Today's retirees face a new set of challenges. Many retire with debt or mortgages, and healthcare costs continue to grow. These costs can quickly diminish retirement savings, especially if you require long-term or specialized care.
Being stuck between caring for aging parents and children who require financial assistance can be stressful for those in the Sandwich Generation. The financial stress of assisting your loved ones with their finances may boost your retirement income requirements above and beyond what you currently make. When calculating how much you'll need to live on after retirement, keep this in mind.
Reduce Your Risks
There are no guarantees in life, the markets, or the economy, but there are risks that can be mitigated. Longevity risk and inflation risk are two issues that retirees must deal with. Both of these hazards have the potential to damage your planning significantly.
Longevity risk is a relatively new phenomenon. Your life expectancy increases as you live longer. The threat of inflation exacerbates this. Even at a 3% annual inflation rate, living expenses double in 20 years. Considering this danger could jeopardize your intended retirement lifestyle.
Retirement as a New Phase of Life
Some retirees now regard their golden years as a new stage of life that involves some employment or business. But this isn't always a terrible thing. Imagine cruising through your 20s and 30s without being able to put your skills, knowledge, and experience to good use. Isn't it difficult to imagine?
When you retire, you have the option of doing the work you've always wanted to do rather than the labor you had to do. It might be a chance to reclaim control of your life and begin a new chapter in employment or study that you find fascinating and engaging.
Retirement necessitates not only financial but also emotional and psychological preparation. Having the financial means to retire is only part of the picture; you should also think about the emotional aspects of retirement and how you'll make the most of this new stage of your life.
Retirement isn't a one-day event where you're done planning when you finish your last day at work. It is a continuous process. While pursuing your financial goals is important, you should also consider your quality of life. Consider consulting with a financial professional if you need assistance developing a retirement plan that meets your financial and lifestyle objectives.
We know how important it is to have a retirement plan that considers market volatility.
Do you know if your current retirement plan is designed to protect you against financial emergencies? If you haven't already, give us a call so we can go over it together and see what areas need improvement to give you financial security and worry-free retirement.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2023 Advisor Websites.