The reality of retirement
Being able to perfectly predict what your retirement will look like is near impossible. Most retirees actually experience their planned financial futures not panning precisely like they assumed. This doesn’t mean planning is fruitless, rather planning helps you get as close to your ideal retirement life as possible.
With that being said, understanding some of the basics can help you develop your plan and get as close to your goals as possible.
Do retirees “outlive” their money?
Not too long ago, many retirees depleted their savings toward the tail end of their lives. This led to the creation of Social Security. While Social Security is still a common supplement to retirement strategies, there are plenty of other planning avenues to help bolster savings. Working with a professional can help you prepare as best as possible, preparing for hard-to-anticipate costs.
Retiring on 70-80% of your salary isn’t always feasible.
One of the most common topics surrounding retirement planning is striving to retire on 70-80% of your final salary. This can be a difficult goal to achieve.
Many retirees want to travel, try new hobbies, and finally get around to doing everything they had put off when they were busy with work. Because of this, some retirees spend just about as much as they did before they retired.
Oftentimes, household spending actually increases as you transition into retirement. This causes an issue if you’ve only planned to retire on 70-80% of your end salary. However, with a solid plan, spending tends to taper off and eventually plateau.
Practicing smart saving makes perfect.
Younger households tend to spend more than older households. Developing smart spending and savings habits can exponentially increase your ability to retire comfortably. While health care spending increases the older you get, other household costs like transportation and housing decline.
Retirement can come earlier than expected.
Most people retire between the ages of 60 and 70. That being said, the average age for retirement in the United States is 62. Life will throw you many curveballs, some of which mean you can find yourself retiring and claiming Social Security benefits earlier than expected. In most cases, this happens to avoid drawing from savings too quickly.
Being flexible in retirement.
Living comfortably in retirement goes hand in hand with having a flexible retirement strategy. Everyone’s retirement can differ slightly, even if they follow the same plan. Using the help of a financial professional can help keep you and your retirement goals on track while navigating life’s ups and downs.