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If you had the chance to double—or even quadruple—your retirement savings, you’d probably jump at that opportunity, right? Well, there’s one simple change you can make today that’s sure to boost your retirement savings.
What’s the secret? I thought you’d never ask!
Quadruple Your Retirement Savings? Really?
An HSBC study of worldwide retirement saving habits discovered that people with some kind of retirement plan have more than three times as much in their nest egg than those with no plan at all.(1)
And savers who take it one step further by working with an investing advisor to put their plan to paper? Their average nest egg is a whopping 445% bigger than non-planners.(2) That’s a big deal!
Now, did you catch that? By working with an advisor and by having a plan in place, you can supercharge your retirement savings.
Understand & Own Your Investing FutureGet Started
"By working with an advisor and by having a plan in place, you can supercharge your retirement savings." —Chris Hogan
Why is a retirement plan so important? Because it gives you a clear path to success. It inspires you to take action. So let’s create a retirement plan for your future!
This savings plan will have three phases, and you can estimate your financial situation for each phase. Think of it the same way you do your budget. You’re making a plan for your money before you actually have it, based on projections for your income and expenses.
It’s important to start with a solid financial foundation, so the first phase begins as soon as you are debt-free and have saved three to six months of expenses in your emergency fund.
Phase One: Simply Save
In the first phase, you’ll invest 15% of your gross income in good growth stock mutual funds through tax-advantaged retirement savings plans such as your employer’s 401(k) and a Roth IRA. It may not sound like much, but if you don’t follow through on this first step, you won’t have any savings to make decisions about down the road.
Your goal is to consistently invest for retirement as you focus on other financial obligations, such as funding college for your kids and buying or paying off your home. A couple with a household income of $56,000 could have around $900,000 for retirement if they invest 15% of their income for 25 years. In 30 years, they could have $1.5 million! Remember: Slow and steady wins the race—every time.
Related: Learn more about retirement. Check out the Retire Inspired Podcast.
Phase Two: Dig Into the Details
Now it’s time to estimate what your retirement savings could be by calculating the income your nest egg will bring. This is where an investing advisor comes in handy.
Ideally, you should be able to live off the growth of your retirement savings rather than depleting your nest egg. An investing advisor can run projections based on your monthly contributions and expected retirement age, making sure to account for inflation and any taxes or fees that may apply down the road.
You should also develop a backup plan in case life throws you a curveball along the way, such as job loss or illness. With careful monitoring and some modest adjustments during years of low returns, you’ll be confident that you can retire with the money you’ll need.
Phase Three: Retirement Savings Reality
Using your monthly budget, compare your current expenses to your retirement savings projections to see where you stand. With an empty nest and a paid-for home, you can plan to ramp up your retirement savings if you need to.
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Based on your forecasts, you can answer several questions: What is your retirement dream? Will you need (or want) to continue working? Will you sell your home? What will you do for fun? What about medical expenses and long-term care?
Keep in mind, too, at age 60, you’ll want to purchase long-term care (LTC) insurance. LTC insurance will protect the money you’ve saved for retirement by helping pay for the expenses of a nursing home or in-home care if you need it. So make sure to factor in LTC insurance as you estimate your retirement budget. It’s a necessity!
"Make sure to factor in LTC insurance as you estimate your retirement budget. It’s a necessity!" —Chris Hogan
Also, until you’re self-insured, term life insurance needs to be part of your plan to cover those who depend on you.
There’s Power in a Retirement Plan
There’s no guarantee that having a retirement plan will make you a millionaire, but it is the first step to reaching your retirement savings goals—because a goal without a plan is just a wish.
Need help getting started with that plan? A SmartVestor Pro can help you understand your investments and work with you to create a retirement plan for your specific situation.
Your retirement future is up to you!
Find a SmartVestor Pro today!
About Chris Hogan
Chris Hogan is the #1 national best-selling author of Retire Inspired: It’s Not an Age; It’s a Financial Number and host of the Retire Inspired Podcast. A popular and dynamic speaker on the topics of personal finance, retirement and leadership, Hogan helps people across the country develop successful strategies to manage their money in both their personal lives and businesses. You can follow Hogan on Twitter and Instagram at @ChrisHogan360 and online at chrishogan360.com or facebook.com/chrishogan360.