All it takes is a little effort and a lot of patience to become confident in your financial decisions.
4 Minute ReadTopic: retirement
If you had the chance to double—or even quadruple—your retirement savings, you’d probably be ready to grab hold of 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? We thought you’d never ask . . .
Quadruple Your Savings? Really?
An HSBC study of worldwide saving habits discovered that people who devise a financial plan have more than twice as much in their nest egg than those with no plan at all.
Be Confident About Your Retirement.Find an Investing Pro
And savers who take it one step further by working with an investing professional to put their plan to paper? Their average nest egg was a whopping 445% bigger than non-planners.
Why is a plan so potent? Because it gives you a clear path to success. And that’s all many folks need to spur them into action.
So let’s create a plan for your future!
This plan will have three phases, and you can forecast your financial situation for each one today. 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 income in good growth stock mutual funds through tax-advantaged retirement 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 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 the household median income of $54,000 could have $875,000–1.2 million for retirement after 25 years.
Related: Learn more about retirement. Check out Chris Hogan’s Retire Inspired Podcast.
Phase Two: Dig Into the Details
Now it’s time to envision what your retirement will look like by calculating the income your nest egg will bring. This is where a pro comes in handy.
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Ideally, you should be able to live off the growth of your savings rather than depleting your nest egg. An investing pro 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. With careful monitoring and some modest adjustments in years with low returns, you can be confident that your savings will last throughout your retirement.
Phase Three: Retirement Reality
Using your monthly budget, compare your 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 necessary.
Based on your forecasts, you can answer several questions: 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?
Remember, too, at age 60, most people will need 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. Keep that in mind as you estimate your retirement budget.
There’s Power in a Plan
While there is no guarantee that a financial plan will make you a millionaire or give you a perpetually rosy outlook, it certainly won’t hurt your chances for a confident future!
Need help? It doesn’t cost a thing to just sit down with a pro and discuss your options.
So what are you waiting for? Find an investing pro today!