Sometimes we are so busy living our lives that we don’t notice the years going by. Suddenly, the “baby” starts high school and the soldiers look younger every day. Before you know it, it will be time to consider retirement.
The main problem with not noticing the years going by is that retirement can creep up on you and catch you off guard. If you haven’t prepared for it, will you be financially ready?
According to statistics released by the Employee Benefit Research Institute, half of American workers aged 45 or older haven’t calculated how much money they will need during their golden years. If you don’t know what you need to save pre-retirement, or what you can afford to spend post-retirement, you may end up unprepared.
However, with careful planning retirement doesn’t have to be a scary prospect. Although you can’t predict exact future needs, and past performance doesn’t guarantee future returns, there are certain action points you can take to prepare for the Great Unknown Future:
Talk to your spouse about the future. When does each of you plan to retire? What would you like to do during your retirement years? Do you want to continue living in the same place, move to sheltered housing, or move closer to your children?
You may say that you will never retire, but many older employees have found that it is not possible to keep working forever either due to health reasons or because many firms prefer to let their older workers go, releasing them into “early retirement.” What will you do if this happens?
What is your anticipated retirement budget? Do you envision yourself spending more? Do you anticipate high medical bills as you age? Will you enter retirement with debt, or will your mortgage be finished?
What about savings and investments? Are you contributing the maximum? Does your asset allocation reflect the fact you are nearing retirement/already retired?
If it’s difficult to answer these questions, consider having an objective, professional adviser help you. Preparing for retirement doesn’t only consist of packing up your desk. It requires careful planning and saving. If you prepare properly, you should be able to enjoy your retirement years.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published April 9, 2012.