With the busyness of our careers and daily life, it may often be challenging to see past our most immediate circumstances, leaving retirement planning to get lost in the mix. However distant retirement may seem, making it a priority and using our present to plan for the future is critical to good financial health in our retirement years.
Do It for Your Future Self
A key to using the present effectively is doing now, what you can’t (or won’t want to) do later. Prioritizing your physical health now is a great way to help save on health care costs down the line. Projections show a steep, constant increase in health care costs in coming years. Unfortunately, retirees often overlook the magnitude of these costs, which can be a large burden on retirement finances. Since we cannot go back in time to preserve our health, focusing on physical health and fitness as a preventative measure is critical to our fiscal health in retirement.
You may also consider traveling more in the near future, before you retire. Though many people envision retirement as the perfect time to travel, saving all your vacations for retirement could actually be more costly. Additionally, travel is cheaper and easier when you’re mobile, so it’s wise to take big trips in younger years.
Finally, though it may not be what you want to do, working a few years beyond what you originally planned is one of the best ways to ensure your money lasts well into retirement. Working longer – even a couple extra years – may produce a significant increase in your retirement wealth. Your future self will thank you.
Budget Generously
Calculating your retirement budget can be challenging. It is essential to determine how much you can afford to spend each year in retirement and create a budget accordingly. Some find it helpful to categorize their spending. Essential items are those that cannot be significantly reduce or eliminated – things like housing costs, food, health care and insurance fit in this category. Non-negotiable items are those that you are not willing to change unless it is absolutely necessary. Finally, there are discretionary expenses – the nice-to-have but not need-to-have expenses which can be reduced or eliminated if necessary.
Unfortunately, inflation and rising prices that lessen the buying power of retirement funds are a fact of life, and only complicate retirement budgeting. Assuming inflation will occur and reflecting this assumption in your planning can help you mitigate its impact on your retirement savings.
Additionally, it’s important to budget for unforeseen expenses. Many retirees wish they would have saved extra for unexpected costs, especially those that can increase dramatically in retirement, like property taxes and household maintenance.
Teamwork Makes the Dream Work
Those closest to you can have a great influence on your retirement planning efforts. It is important to discuss anticipated retirement spending and manage expectations with your partner. Just as you and your significant other would discuss major purchases in your working years, couples should get on the same page about anticipated retirement spending as well. Discussions about the experiences and goals for retirement are extremely beneficial. When everyone understands what is driving your motivation to plan, save and invest towards retirement, those things become more real to everyone.
An investment professional is a valuable resource as you plan for retirement success. A seasoned investment advisor can help you accurately calculate your retirement spending, create your budget and provide additional insight and tools to help you stay on track.
You’ve Earned It
Once you’ve finally made it to retirement, it’s time to enjoy as your hard work and planning pay off. However, to make the most of your retirement wealth, it’s important that you stay true to the budget and habits you set forth in your planning, as well as review your plan compared to real experiences at least annually.
Boulay Can Help
Keeping future spending at the top of mind and making a few small lifestyle changes ensures a much more comfortable retirement. Now is the time to create healthy financial habits that will benefit you in the long run. To learn more, talk to a member of the Boulay Financial Advisors, LLC team at 952.893.9320 or learnmore@boulaygroup.com.
Investment Advisory Services offered through Boulay Financial Advisors, LLC a SEC Registered Investment Advisor. Certain Third Party Money Management offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor. Securities offered through Valmark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Suite 300 Akron Ohio 44333-2431* 1-800-765-5201
Boulay PLLP and Boulay Financial Advisors, LLC are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc. Prime Global is not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc.