Money Advice

5 retirement money hurdles

Posted by The Simply Money Advisors Team on Dec 12, 2018 10:54:28 AM

What are your biggest concerns about money and retirement?

While it’s nice to read articles that emphasize the positive, it’s often the mistakes you avoid that make the difference between success and failure.

With that in mind, here are five retirement money hurdles you need to master for a solid financial future.

1) How Will You Pay Your Bills?

If you answered, “I’ll pay my expenses with my retirement savings,” you might need to reconsider.

Many people have been told that a good retirement income rule is to set a goal to earn (between returns on investments, Social Security, etc.) the equivalent of 70 to 80 percent of what you earned before you stopped working.

That might be okay for a while. However, most retirees find that 70 or 80 percent is not an accurate amount for their spending needs.  For example, health emergencies are the #1 threat to your retirement budget.

But health expenses aren’t the only concern. What about investing in new hobbies, travel, family, kids in need, home repairs and your grandchildren’s education?

Beware, because what seems like enough on paper, may not be enough when it comes to actually meeting your monthly expenses. Only a comprehensive financial plan specific to your spending needs can truly represent whether you are likely to run out of money or will have a successful retirement. 

2) How Secure is Your Job?

You’re preparing for your transition to retirement, which is a good thing. But are you overlooking an unexpected forced retirement?

More than half of workers are forced to retire earlier than planned.[1] Beyond layoffs and firings, many people have to retire due to personal health issues or the health of a loved one.

3) Social Security Rule Changes

Millions of married people who were planning to retire in 2016 found themselves with one less income earning strategy.

In November 2015, Congress announced a sudden end to the “file and suspend” option, which allowed the higher-earning spouse to file for Social Security benefits, then suspend them, only to reclaim them at a later date (and at a higher rate).

File and suspend enabled the lesser-earning spouse to start earning monthly benefits equaling half of the higher-earner’s full Social Security benefits right away. This strategy sometimes resulted in upwards of $130,000 of extra income over a 25-year retirement.

But that option is gone.

What will the changes be to the program over the next 10, 20, 30 years? The bottom line is, what you can expect from Social Security today is likely to change in your lifetime.

For more information about the ins and outs of Social Security, download our free guide, “9 Things Everyone Must Know About Social Security.”

4) Investment Diversification

If you have not diversified beyond your 401(k) or IRA, take a close look at today’s balance and circle it. Ask yourself, “Can I stretch this out for the rest of my life?”

If you don’t diversify, the extreme volatility you may be experiencing currently may be the scary reality you’ll continue to face when you retire.  And this can be a threat to stretching this money to last for your entire retirement.

Even if the answer is, “Yes, and several generations beyond,” then the question is, why haven’t you diversified? We live in an ever-changing world, and in order to withstand global shifts in the markets, it’s imperative that you build a diversified portfolio.

5) Managing Risk

You may be like a lot of Baby Boomers who have worked hard, saved well, and invested wisely for the future. And now that retirement is within view, you might be thinking you can let up a little and start to cruise.

But this is not the time to lose focus.

The reality is, the majority of pre-retirees get caught shorthanded when it comes to crunching the numbers they think they need compared to what they’re actually going to need.

One of the most worrisome retirement facts is this: A whopping 60 percent of retirees run out of money a full nine years before the end of their lives.[2]

The Simply Money Point

There is no such thing as a completely secure future. You have to plan to make your assets last. Thorough planning can go a long way toward making your actual future match up with the future you’ve always envisioned.

To get help creating a plan that can provide a more secure future for you and your loved ones, schedule a time talk with one of our financial advisors today.

 

[1] April 2015 AARP

[2] December 2014 AARP

 

Disclaimer

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Simply Money Advisors), or any non-investment related content, made reference to directly or indirectly will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, this content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained here serves as the receipt of, or as a substitute for, personalized investment advice from Simply Money Advisors. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Simply Money Advisors is neither a law firm, a certified public accounting firm, nor a tax advisory firm and no portion of the blog content should be construed as legal, accounting, or tax advice. Please consult your own attorney, accountant, and tax advisor for legal, accounting, and tax advice. A copy of the Simply Money Advisors’ current written disclosure statement discussing our advisory services and fees is available for review upon request. Advisory services offered through Simply Money Advisors, a SEC registered investment adviser. Insurance services are offered through Simply Money Insurance Agency, a separate entity from Simply Money Advisors. Simply Money™ and the spiral symbol are trademarks of Simply Money IP Holdings, LLC.

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