Answer these five questions to see how ready you are, and to learn the next steps you should take.
Retirement planning can seem overwhelming, which may be why you've postponed it. But the sooner you can create your plan, the better—regardless of how close you are to retirement.
Preparing for retirement typically includes:
Wondering where to begin (or what some of this means)? A financial advisor can help walk you through each step of what can be a complex process, explain what's required, and suggest other professionals to involve.
Make the most of before- and after-tax contributions. Be sure to take full advantage of any 401(k) plan your company is offering, which likely includes some level of matching contribution—that's the equivalent of free money. Note: After age 50, the amount you can contribute to tax-deferred accounts such as IRAs and 401(k)s increases, to give you a chance to catch up.
John Knowles, Market Growth and Development Consultant for Wells Fargo Advisors, says Roth IRAs—to which you contribute after-tax dollars—are also worth exploring because they offer tax-free growth potential, and investment earnings are distributed tax-free in retirement as long as specific requirements are met (learn more about traditional IRAs versus Roth IRAs).
Talk to your loved ones about your retirement goals. Involving your immediate family members can be an important part of retirement planning. “This is about making sure your partner is on the same page in terms of what your retirement goals might be," Knowles says. "Quite often we sit down with clients and find out that one person's idea of an ideal retirement is different from the other's. It's important to get both partners' retirement goals aligned."
Plan to review regularly. You should review your retirement plan on a regular basis, particularly after a significant life-changing event happens. This might include the death of a loved one, or needing to care for an aging parent. "A death of a parent changes things," Knowles says. "Certainly, a divorce can impact not only the amount of money that you've now saved, but what the goal in retirement might be."
Now is a good time to consider taking the next step with your retirement planning, which means tackling these items, if you haven't already:
Wondering what to do next? Your financial advisor can help determine how far along you are, what you should focus on next, and suggest other professionals to involve.
Keep your loved ones up to date. Regularly talking to your immediate family members about your goals can be an important part of your retirement planning.
“This is about making sure your partner is on the same page in terms of what your retirement goals might be," says John Knowles, Market Growth and Development Consultant for Wells Fargo Advisors. "Quite often we sit down with clients and find out that one person’s idea of an ideal retirement is different from the other's. It's important to get both partners' retirement goals aligned."
Consider maximizing your 401(k) contributions. Make sure you’re taking full advantage of any 401(k) plan your company is offering—which means checking that you're maximizing any matching contributions. If you're close to middle-age but feel like you're falling a bit short, ask your financial advisor about making catch-up contributions after age 50 to tax-deferred accounts such as IRAs and 401(k)s.
Knowles says Roth IRAs can help as well because they offer tax-free growth potential, and investment earnings are distributed tax-free in retirement as long as specific requirements are met (learn more about traditional IRAs versus Roth IRAs).
Make this part of a conversation you'll have with your financial advisor the next time you meet.
Factor life-changing events into your planning. You should review your retirement plan on a regular basis, particularly after a life-changing event. This might include the death of a loved one, or needing to care for an aging parent. "A death of a parent changes things," Knowles says. "Certainly, a divorce can impact not only the amount of money that you've now saved, but what the goal in retirement might be."
What next? Your financial advisor can help determine how far along you are in retirement planning, what you should focus on, and suggest other professionals to involve.
As you know, retirement planning can be dynamic. For you, that could include needing to:
Wondering what to do next? Keep meeting with your financial advisor, who can help determine how far along you are, what you should focus on, and suggest other professionals to involve.
Continue involving your immediate family. Make sure your partner's view of retirement and yours are the same, but also confirm that regularly because that can change, says John Knowles, Market Growth and Development Consultant for Wells Fargo Advisors. "Quite often we sit down with clients and find out that one person's idea of an ideal retirement is different from the other's," he says. “One person’s main goal in retirement might be about estate and legacy. The other’s goal might be living a fun lifestyle with travel. It's important to get both partners aligned with what the goals are to make sure those things happen.”
Diversify how you're saving for retirement. Knowles says your retirement savings options shouldn't be limited to what your employer is offering.
"Look for additional opportunities to save for retirement beyond your employer's retirement plan, such as IRAs, annuities, things like that," Knowles says. Knowles says Roth IRAs can offer tax-free growth potential, and investment earnings are distributed tax-free in retirement as long as specific requirements are met (learn more about traditional IRAs versus Roth IRAs).
Stay the course. Continue reviewing your retirement plan on a regular basis, particularly after a life-changing event. This might include the death of a loved one, or needing to care for an aging parent. "A death of a parent changes things," Knowles says. "Certainly, a divorce can impact not only the amount of money that you've now saved but also what the goal in retirement might be. A lot of times our clients are walking into our advisor's offices saying, 'Hey, I've got to make a change because of a life-changing event. '"