1. Lifestyle Readiness

Making an honest assessment of your financial situation will help determine if you are retirement ready or not, potentially requiring adjustments to your retirement plan, goals, strategies, and objectives.

By digging into your financials, you can determine if you have a shortage in your retirement savings – dependent on how long you plan to spend retirement and your planned retirement lifestyle. If you find yourself uneasy about your retirement plan, I highly suggest sitting down and sorting through the details with a financial planner.

Necessary changes to accomplish your goals may include:

• Cutting back on everyday expenses where possible. For instance, reducing the number of times you eat out, entertain, or vacation. If you reduce your expenses by a mere $50 per week (approximately $200 per month) and add that to your monthly savings, it would accumulate to approximately $79,914 over a 20-year-period, assuming a daily compounded interest rate of 4%.
• Plan on part-time work in ‘retirement.’ If you have a hobby you enjoy and can make some income in retirement, this could significantly bolster your plan. Every penny counts; even if the salary is ‘minimal’ compared to what you use to make.
• Increase your savings each year. Adding $10,000 per year to your retirement savings will have an exponential impact on your plan thanks to the power of compound interest.
• Ensure you reach the threshold to maximize your employer’s matching contribution to your salary deferral program. This is free money, so why not utilize it!
• Modifying your intended retirement lifestyle. If you find yourself behind the eight-ball of retirement, the answer may be as simple as traveling less each year, downsizing, or optimizing ‘retirement’ with one of the above solutions.

Remember: one thing you can never get back is time. Procrastination is a time-killer and can only hurt your retirement plan.

2. Investments

While everyone wants to chase the illustrious 10%+, if you do not have a true financial plan, you do not know the necessary rate of return to meet your goals. This can be dangerous, as it gets increasingly easier to chase returns at the sake of risk management. However, if you have a financial plan in place, you know what return you NEED to make it work and do not have to take on unnecessary risk. While many people think of investing with the “let’s get as much as we can” philosophy, this can lead to the derailing of a solid retirement plan due to the void of a risk management strategy.

3. Debt Strategy

High interest debts can have a negative impact on your ability to save – the amount you pay in interest reduces the amount you have available to save for retirement. However, if your interest rates are low, it may be prudent to hold onto the debts and let them playout, as they could be lower than your rate of return on your investments. If that is the case, the spread you are earning on your investments could make it prudent to maintain the liability for the time being. Once again, make sure to discuss thoroughly with your planner before deciding on which avenue to pursue.

Bottom Line

Having your retirement savings on track can provide great satisfaction; however, if they are not, do not lose heart. Instead, play catch-up where you can and consider revising your current or future lifestyle where necessary. Retirement plans come in all shapes and sizes, so do not panic if yours does not appear as ‘neat’ and ‘tidy’ as your neighbors, they may just workout the same.

This website commentary reflects the personal opinions and analyses of Gainplan LLC employees. It does not describe Gainplan LLC’s advisory services or client investment performance. Views in the commentary may change anytime without notice. Nothing here constitutes investment advice, performance data, or recommendations for specific securities, transactions, or strategies. Mentioning a security or its performance is not a buy or sell recommendation. Gainplan LLC uses various investment strategies, not all discussed here. Investing in securities carries risks, including loss. Past performance does not guarantee future results.

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