You're a retirement planning procrastinator. It's time to focus on your retirement plan.
John Knowles, Marketing Growth and Development Consultant for Wells Fargo Advisors, says people may procrastinate about some of the first steps of retirement planning, such as figuring out what they want in retirement.
Knowles suggests comparing retirement planning to taking care of your health. Regularly seeing a doctor for checkups isn't something anyone necessarily looks forward to. But the benefits—potentially catching problems early—outweigh the risks.
"To get to that state of health, financially, you have to do some planning," Knowles says. "And yes, there's some work involved. You have to figure out where your money is going. Is it going in the right places? Is it going where it's most efficient for you? "
Knowles has observed with some clients that paying off debt could be one of the biggest impediments to setting aside money for retirement. He recommends talking to a financial specialist to set up the right plan for your situation; this could likely mean focusing on paying off high-interest debt so you could then focus your efforts on investing for retirement.
You should also look into whether you're taking full advantage of employer matching contributions in a workplace retirement savings plan such as a 401(k) plan. "That's free money you shouldn't leave on the table," Knowles says.
Knowles adds you could also consider retirement savings beyond workplace plans, including Roth IRAs, which let you contribute after-tax dollars. These plans offer tax-free growth potential, and investment earnings are distributed tax-free in retirement as long as certain requirements are met. Learn more about traditional IRAs versus Roth IRAs.
Develop your planning skills:
- Design a reasonable budget—and stick to it.
- Balance expenses with investing for retirement.
- Pay yourself first and save consistently.
- Plan regular meetings with your financial advisor.
- Keep recurring debt to a minimum.
- Diversify your investment portfolio to help address downturns.
- Put aside enough cash for unexpected expenses.
Other things to consider
Baby Boomers, Generation X, and Millennials face unique challenges. But each is also in a unique position to take control of their retirement future.
Learn ways to help improve the likelihood of your retirement income covering your expenses.
You're a proactive retirement planner. Keep up the good work!
John Knowles, Marketing Growth and Development Consultant for Wells Fargo Advisors, recommends that you keep fine-tuning your retirement plan to help ensure it stays aligned with your goals. If you haven't already, consider:
- Balancing current expenses with enough investments for retirement.
- Adding pay raises, inheritances, or other additional revenue into your retirement savings accounts.
- Reviewing and revising your budget and retirement plans after significant life changes, such as marriage.
- Taking advantage of catch-up contributions.
- Diversifying your investment portfolio to help smooth out downturns.
- Having enough cash in reserve for unexpected expenses.
- Reviewing insurance needs now and for retirement (life, disability, etc.).
Knowles adds that retirement plans are not set in stone and ideally should be receiving regular attention. Remember that changes in income and in your personal life—such as marriage, having children, or looking after your elderly parents—signal the need for a retirement plan review. Knowles recommends annual checkups with a financial advisor, at a minimum.
"'Set it and forget it doesn't work with your retirement plan," Knowles says. "You have to be engaged with it."
Knowles also notes that retirement isn't always voluntary and could happen much sooner than planned. You may have to retire earlier than you planned if you lose your job, face a health setback, or need to care for a loved one in poor health.
That’s why Knowles says you should have plans in place for early retirement, as well as "on-time" or, even late, retirement.
What else to consider
Baby Boomers, Generation X, and Millennials face unique challenges. But each is also in a unique position to take control of their retirement future.
Learn ways to help improve the likelihood of your retirement income covering your expenses.