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Three Essential Components to Your Retirement Plan

1. Lifestyle Readiness

Making an honest assessment your financial situation will help determine if you are retirement ready or not, forcing possible modifications to your retirement 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 commentary on this website reflects the personal opinions, viewpoints and analyses of the Gainplan LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Gainplan LLC or performance returns of any Gainplan LLC Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Gainplan LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

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