The 2020 pandemic and subsequent massive market selloffs jarred the nerves of investors across the world, and particularly those in their 50’s that are getting closer to retirement.

Planning for retirement

Angie Kaufman

Are you finding yourself in your 50s starting to think about retirement with a sense of dread because you’re not prepared? Planning for retirement may seem like a monumental task, but with a proper strategy in place it won’t feel like an uphill climb. In 2019, someone in their 50s had an average 401(k) balance of $160,000[1]. The 2020 pandemic and subsequent massive market selloffs jarred the nerves of investors across the world, and particularly those in their 50’s that are getting closer to retirement. Now with the market rebound at or above previously established high levels, a different sense of anxiety emerges about the market falling yet again. You can expect as we get closer to the November elections, that market gyrations may increase and test the resolve of those approaching retirement. All the more reason to spend time thinking about your retirement goals and how best to allocate your funds given the current market environment.

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Our best practice guidelines indicate that at retirement you should have saved ten times your income by age 67.  Someone age 67, normal social security retirement age, leaving a salaried position of $100,000 annually would be looking at an essential savings of $1,000,000. If you’re a married couple retiring together with an ending salary of $250,000, you can do the math. Understanding that your savings should provide for 45% of your pre-tax, pre-retirement income with a withdrawal rate of 4-5% yearly, adjusting for inflation, your next question should be – Have I saved enough?

Read these questions. Think deeply about your own personal situation. By taking the time to answer these questions specific to your own plan you can better prepare for your financial future.

  • At what age do you hope to retire?
  • What’s your marital status?
  • What do you think your annual income needs will be?
  • What state do you think you’ll be living in?
  • How about your health? Are you staying active?
  • Do you think taxes will go up\down or remain the same?
  • If you own a home, will you sell it and downsize?
  • Do you think Social Security will still be around?
  • Will there be family members you’ll need to care for?
  • Do you own a business that you plan on selling?

Saving is critical to your long-term financial well-being. At the very least, you should be saving 15% of your annual salary. If you’re already saving 15%, increase it each year by at least 1%. How? Create your monthly budget and stick to it. What are musts in your life and what are nice to haves? Can you give up some of the nice to haves? These are some truly serious questions. You now have a shortened time horizon to get to where you need to be.

Are you taking advantage of your employer’s retirement plan? Do they provide an employer contribution if you participate? If your employer is offering any type of match and you haven’t joined their plan, you’re leaving money on the table that over the years can help you build a nice nest egg. Over the age of 50, do your best to take advantage of your annual catch-up contribution if your finances allow.

Do you know someone who is living with a family member because they can’t make ends meet in retirement or someone who is retired who will run out of money too soon? Do you want to be in a similar situation? Continue to increase your savings and pay off your debt to enter retirement debt-free and help alleviate some financial worries.

All this talk about money, but what is more priceless? You got it – your health! Healthcare may be one of your greatest expenses in retirement. Staying active and eating healthy provides you with a better quality of life, the ability to handle stress, and live longer in retirement. Your family’s longevity is an indicator of your life span as is their inherent health. Your retirement savings may need to last you for 15-30 years depending on when you decide to retire and how long you will live which takes retirement planning.

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Use the retirement nest egg calculator at https://www.hh-wm.com/financial-calculator/ to preview some scenarios, but be sure to come back. What a revelation, right?!  Consider working with a Financial Advisor to help you reach your retirement goals by addressing your financial needs and your risk tolerance so your investments can meet the mark as one article cannot address all your personal needs.

Retirement is a major life transition that requires ample preparation and planning. We at Henry+Horne Wealth Management can help you develop a plan that includes the best possible investment opportunities and maximize your retirement benefits while minimizing the financial impact. Our advisors provide expert administration and consulting services. We look forward to hearing from you to assist with this glorious journey we call life.

[1] Internal Revenue Service “Retirement Topics: Catch-up Contributions.” Accessed May 29, 2020

Angie Kaufman is Vice President of Retirement Plans for Henry+Horne Wealth Management where she works with group retirement solutions for organizations. Angie can be reached at AngieK@hh-wm.com or 480-483-3489.