You want to be ready for retirement when the time comes. That’s a great goal, but what happens next? Preparing for retirement is an important goal with a wide range of variables and possible solutions. After hosting a seminar on Social Security benefits and retirement, we asked Todd Micciche of MEMBERS Financial Services to share his insights and help us learn what actions we can take today to become retirement ready:
TM: I would say one of the most common questions I get, especially from the younger members that I speak with, is “How much do I need to save in order to retire?” This answer ranges a great deal, so I think it’s a good topic for people to consider. The good news is there are some proven steps that everyone can follow.
1. I believe it is helpful to think in terms of income replacement. For example, if a household is used to living on an annual income of $80,000 would they anticipate needing the same income in retirement? Perhaps 80% of that income? A good rule of thumb is a replacement figure somewhere between 70% and 100% of your working annual income.
2. Then think about the sources of this future income. How much do you anticipate Social Security will cover? Do you have rental properties, pensions, or other sources of income that will help? Take these figures into account along with your desired income replacement, and that will give you an idea of what you will need to provide from your own savings.
3. Use realistic assumptions when considering things like investment returns and inflation, as well as life expectancy. It is often better to be conservative as it likely will encourage you to save more.
4. Take advantage of the resources available to you – the Unitus website has some great calculators where you can input this information and get answers without having to worry about all of the complicated math involved.
5. Seek out the help of a trusted financial advisor to implement a plan. While an advisor is certainly valuable in terms of investment selection and helping you make sure all of your bases are covered, they also serve to help you monitor your progress and handle the bumps in the road, keeping you on track with your plan. Successful investing is an emotional and psychological endeavor as much as anything else, and having an objective partner in challenging times can help you stay on track with your plan through the emotional ups and downs.
To speak with a person dedicated to serving your best interests about retirement, investments, insurance or any other financial question, contact MEMBERS Financial Services today.