With the recent stock market returns, low interest rates, people living longer, uncertainty about social security and increasing medical costs, having a successful retirement is a concern of the vast majority of Americans.
The issue: What can be done to make one’s future retirement better? Below are some general areas that should be addressed. The sooner one makes decisions in these areas, the better.
#1: Set your goals: What are your goals? Write them down—that makes them real and you’ll have a better likelihood of achieving them. These goals may be things you want to accomplish, people you’d like to help, perhaps places you’d like to visit. Your goals can be short or long term or both. They can be big or small. What’s important is that they are important to you. When you write out your goals, include an expected timeframe, the likely costs and how you intend to pay for them.
#2: Stop procrastinating: When it comes to making a decision regarding your retirement, remember these words: Time is money! While a rash decision isn’t always a good one, some retirees don’t make decisions timely enough. “Thinking about it” could be an opportunity lost. Provided that you have accurate and comprehensive information, and that you understand the circumstances and possible repercussions, you can make your decision. If you’re not sure you have all the available facts, then keep digging. Ask an objective (one that does not sell products) financial advisor; in other words, get a second opinion.
#3: Diversify your nest egg: The old adage is apropos: Don’t put all your eggs in a single basket. Diversify your investments across asset classes, terms and risk. Investing only in the stock market, which can be quite lucrative, is also quite risky. Meanwhile, having all your money in a CD or money market, while extremely safe, is probably not going to give you the desired outcome. A financial advisor can help you figure out the correct level of risk for you and your goals.
#4: Know the difference between good debt and bad: The simple fact is that not all debt is bad. Debt that provides you with a tax deduction, like a mortgage or home equity loan, is a better type of debt. On the flip side, a personal loan or credit card debt is considered bad debt because the interest isn’t tax deductible. Moreover, those interest rates could be high, bordering on usurious.
#5: Understand life’s risk: There are things in life that can go terrible wrong. When you consider these bad things such as fire, disability, getting sued or dying, you have three options. The first is to avoid risk, which is possible with some risk but not most. Second, you can transfer the risk to an insurance company. Third, you can accept the risk and the bad outcomes that may come with it. Again, this is a situation that a professional can help you with, so that you are protected or at least know the risk you take.
#6: Have proper planning documents for you and your estate: In the event of your passing, or if you become incapacitated, mentally or physically, do you have the proper documentation for your designees, beneficiaries or heirs? Will they know what it is you want them to do or have? Who will make your health-related decisions on your behalf? A living will or advance directive can be made long before they are needed. If you are a property owner, having a living trust could help ensure that your assets are properly distributed upon your passing. An estate-planning attorney can help you put your affairs in order.
#7 Understand the areas where you need help and where to get that help. To be able to better understand the areas where you may need help, download and complete this short questionnaire, at “Financial Satisfaction Survey.” It addresses many of the possible areas to help your retirement.
If you want the services of a financial professional, you should conduct the best to search for such an advisor. At a minimum they should be qualified, have experience, and abides by a code of ethics. You should search for a Certified Financial Planner® that does not sell products such as annuities, Investments or Insurance. You can Google “Certified Financial Planner” “Fiduciary” “your city”. By using quotations you will get a better outcome. This should be a starting point in searching for a financial professional.
The alternative way to search for such an advisor near you is to search for a member of Garrett Planning Network or the National Association of Personal Financial Advisors (NAPFA).