By Nicholas Ibello, CFP®, AIF®
Life moves pretty fast. One year you're signing your employment contract and cutting the cake that ushers you into retirement years a few decades later. What you do between now and your retirement will determine whether you'll enjoy your golden years. If you ever wish to enjoy the fruits of your work, you've got to take retirement planning seriously.
This article will show you why retirement planning is critical, the benefits of retirement planning services, and what you can do to have a smooth transition when your paid work ends.
Have Enough Money to Spend in Retirement
After working hard for years, you want to transition into retirement without feeling the financial pinch of not having a paycheck. However, you can only enjoy retirement if you put aside enough money now to see you through your post-employment years. If you don't, you're going to struggle to make ends meet.
Retirement planning helps you save towards retirement. Each month, you will set aside a portion of your earnings to secure your financial future. Saving money is certainly a challenge, but the truth is it's more of a perception than a numbers game. If you envision yourself enjoying a peaceful retirement, you'll find ways to save and stick to a savings plan to realize that goal.
Financial Obligations May Increase in Future
While it's good to have a positive outlook on life, it's best to approach retirement with cautious optimism. The economy could take a downturn, inflation soar, or you may get into financial hardships. All these might hurt you financially in one way or another. So the long and short of it is your future isn't fully guaranteed. For this reason, it's important to have a retirement plan in place and stick to it.
Makes You Less Dependent On Your Family
Another reason to plan your retirement is so you can be financially independent in your sunset years. It's unfair to expect your kids to chip regularly, yet they have lots of financial obligations. If you don't take any actions to secure your financial future, the burden of care can fall squarely on your children. Having a firm retirement plan helps ensure you're not dependent on anyone anymore than their financial situation allows.
Achieve your lifelong goals
Due to work commitments, you may not have the time or even the finances to go for a dream holiday or try something new. Retirement creates the best opportunity to visit those exotic places and engage in those activities that you couldn't in your working years. Having a strong retirement plan in place can help eliminate the financial stress and helps you pursue those goals. Your money can free you up rather than become an obstacle.
Relying on Pension or Social Security is Risky
Even though retirement qualifies you for low-cost medical coverage via Medicare and monthly benefit checks from Social Security, these alone won't guarantee you a comfortable life in retirement. You will need other finances to cover the lifestyle you've gotten used to in your working years. However, the funds you save towards retirement will more than supplement your benefits and provide a safety net if social security benefits or Medicare benefits are taken away.
Benefits of Working with a Financial Advisor
A financial planner can help you in the following ways:
Financial Planning for Retirement
Where do you see yourself financially after retirement? What does a comfortable retirement look like for you? You've got to take charge of your financial life if you want a happy retirement. A financial planner can help you:
- Determine your short-term, medium, and long term goals
- Evaluate your tangible assets and any existing liabilities
- Create a gap analysis to find out what you need to achieve your financial security goals
- Create a road mad to help take you from your current situation to where you want to be in future
- Execute your financial planning strategies
- Monitor and adjust your plans every year or as necessary.
Investment Management for Retirement
The right advisor can design a wealth management portfolio that helps you progress towards your goals. Your investment will always be in safe hands with the right financial advisor, whether it's stocks or mutual funds or commodities or structured products.
Tax Planning for Retirement
Just because you're heading into retirement doesn't mean you'll be spared taxation. Work with a financial planner or tax specialist to help achieve tax efficiency. This is where tax planning comes in handy. You can only achieve efficiency by retaining as much of your earnings on investments as possible and reducing your tax liability so that you can save enough cash in retirement. An advisor can help you create a plan that suits your needs or situation.
Another benefit of working with a financial advisor is that you get sound guidance to make smart decisions that protect your estate and assets now and after your death. A key part is structuring an estate plan that preserves your property assets while ensuring sufficiency in your lifetime. It also provides liquidity for the estate of any beneficiaries. Estate planning will help give you the confidence that your real estate is handled properly and assets shared according to your wishes.
An integral aspect of retirement planning for retirees in Baltimore is protecting their investments and assets. Unfortunately, old age comes with increased medical costs, and you will have to navigate the complex Medicare system, which at best doesn't provide adequate coverage to you or your family. As part of their retirement planning services, a financial planning professional can help you choose a life insurance policy or long-term insurance provider.
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