Financial Planning

Americans Need To Stop Winging It With Their Retirements

You need a well-devised plan to ensure you can retire the way you want.

If your goal after a lifetime of hard work is to enjoy a good or even great retirement—one where you can do more than just pay the bills and survive—then sound retirement planning is a necessity.

In my experience, though, too many people aren't really planning for their retirements—they're just winging it.

If there's any situation where "just winging it" is a bad idea, it's retirement.

When I talk about sound retirement planning, I mean more than stashing away money in an individual retirement account or 401(k). Sure, saving money is important if you want to accomplish your retirement goals. You want to save as much as possible.

But saving money is just one aspect of a retirement plan. It's not, in and of itself, a plan.

For anyone who is about five to 10 years away from retirement, here are a few things to consider to help you keep on track when working to meet your retirement goals:

Gauge now whether you'll have enough money to cover expenses.

Tally up the income you'll have when you retire. Some sources of that income could be Social Security, a pension or rental income. Then, figure out what your approximate monthly expenses will be.

Obviously, if you figure up $10,000 worth of monthly expenses, but just $5,000 worth of monthly income, you have some work to do between now and the time you actually retire to see if you can close that gap. Something has to give. Without enough income, you don't have a retirement.

Don't forget taxes and inflation.

In a sense, you may not have saved as much for retirement as you thought. Over the years, you may have squirreled away money in an IRA or 401(k), deferring taxes on those dollars in the process. Unless you've placed your assets in a Roth IRA, when you start withdrawing that money, Uncle Sam will want his share, so every dollar won't be available to you.

By the same token, inflation can chip away at your spending power. As you determine what kind of retirement you can expect to have, you need to take taxes and inflation into account. Otherwise, you could be in for a rude awakening.

Consider avoiding market volatility in your portfolio.

On more than one occasion, I've sat down with a new client who's just a few years from retirement and immediately saw that their portfolio was exposed to market volatility. One bad dip in the market, and their retirement plans could go sour quickly. Generally, those nearing or in retirement place their assets in more conservative products and strategies to avoid taking such risks at that point in their lives.

As you close in on retirement, you don't want all your years of planning to be undone by a bear market, so it's important to consider your risk tolerance when allocating your retirement assets. If you're 35, you have three decades or more to recover from a downturn in the market. If you're 60, you have a lot less time left, and it's tough to recover from a major loss.

Have an estate plan.

Maybe it's just an unwillingness to think about dying, but too many people don't have a good estate plan. By working with an estate planning attorney, though, you can build in a lot of protection for the next generation.

If you have a trust that's properly set up, you can avoid probate with the assets in that trust. You can also mitigate the estate taxes your beneficiaries might pay.

If you start thinking and planning well ahead of time, you and an adviser can come up with a solid retirement strategy that can make a big difference in the amount of money you have for retirement and the enjoyment you will get out of those later years of life.

Winging it won't be necessary.

Derek Gregoire, investment adviser representative and insurance professional, is co-founder of SHP Financial in Plymouth, Massachusetts, and host of the radio show "Retirement Road Map."

Ronnie Blair contributed to this article.

About the Author

Derek Gregoire

CEO, SHP Financial

Derek Gregoire, co-founder of SHP Financial in Plymouth, Massachusetts, is insurance licensed and is licensed as an investment adviser representative, which allows him to provide financial and investment advice, as well as personally manage investment portfolios as a fiduciary adviser. For seven years, Gregoire has been host of the popular radio show, Retirement Road Map, which airs on WBZ, WRKO and WXTK.

Investment Advisory Services are offered through SHP Wealth Management LLC, an SEC registered investment adviser.  Insurance sales are offered through SHP Financial, LLC.  These are separate entities,  Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC. In addition, other supervised persons of SHP Wealth Management, LLC are independent licensed insurance agents of SHP Financial, LLC.  No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC and SHP Financial, LLC will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product. SHP Financial utilizes third-party marketing and public relation firms to assist in securing media appearances, for securing interviews, to provide suggested content for radio, for article placements, and other supporting services.

Most Popular

Is the Stock Market a House of Cards?
investing

Is the Stock Market a House of Cards?

The stock market volatility we’ve been experiencing and the apparent disconnect with the broader economy have some investors wondering just that. But …
October 12, 2020
Stock Market Holidays in 2020
Markets

Stock Market Holidays in 2020

Is the stock market open today? Take a look at which days the NYSE, Nasdaq and bond markets take off in 2020.
October 12, 2020
10 Worst Things to Keep in Your Wallet
Scams

10 Worst Things to Keep in Your Wallet

Storing your passport book or card, a spare key, or any of these other important items in your wallet leaves you open to identity theft -- or worse.
October 9, 2020

Recommended

Bad News on IRA and 401(k) Contribution Limits for 2021
retirement plans

Bad News on IRA and 401(k) Contribution Limits for 2021

Retirement savers will be disappointed with the contribution limits for next year, but at least more people will qualify for retirement tax breaks in …
October 26, 2020
The Politics of Election-Year Financial Planning
retirement

The Politics of Election-Year Financial Planning

The competing candidates for president are polar opposites in terms of taxes, adding a new urgency to year-end tax planning. Just what are they propos…
October 24, 2020
The Best Fidelity Funds for 401(k) Retirement Savers
Investing for Income

The Best Fidelity Funds for 401(k) Retirement Savers

Fidelity funds are renowned for their managers' stock-picking prowess. We rate Fidelity's best actively managed funds that are popular in 401(k) plans…
October 21, 2020
The Best Vanguard Funds for 401(k) Retirement Savers
mutual funds

The Best Vanguard Funds for 401(k) Retirement Savers

Vanguard funds account for a third of the 100 most popular 401(k) retirement products. We rank Vanguard's best actively managed funds, including its t…
October 21, 2020