By Novi Wealth Partners
Regret is a part of life. In fact, we often learn from past regrets to make better choices in the future. But when it comes to retirement, there are no do-overs, and any mistakes you have made in your preparations are a lot harder to remedy, but not impossible. Here is the good news: if you are open to learn from others, your retirement still has a chance to be fulfilling and comfortable. Take a look at these four tips that will help you work toward a regret-free retirement.
1. Save Early And Often
Many people, 55% according to a Global Atlantic Financial Group study, (1) enter retirement and discover several things they wish they’d done differently. And the number-one regret? Not saving enough. One of the ways to make sure you have the nest egg of your dreams is to save early and often. While it may be tempting to hold off on saving until the kids are out of the house or until you are more established in your career, do not. The longer you hold off saving for retirement, the harder it will be later on.
For every year you delay in saving, you’ll have to contribute exponentially more to reach your savings goals because of compound interest. If you start saving $400 per month at age 25, you would have $1 million saved by age 65 (assuming a 7% annual investment return). If you do not start until age 35, you will have to save around twice as much to reach $1 million by age 65. Make it a priority to save, even if it seems like a small amount, and you will be on your way to avoiding this regret.
2. Set A Realistic Retirement Spending Plan
A common retirement misconception is that you will not need as much money in retirement as you do now. You may think that you will not have a mortgage in retirement or that you will not be supporting your kids anymore. And while your expenses will change, that does not mean you will have fewer expenses. For example, healthcare costs can put a serious dent in your retirement savings. It is estimated that the average couple will need an average of $285,000 to cover medical expenses in retirement, and that is often more than people have saved for retirement overall! (2)
To make sure you do not underestimate your retirement needs, develop a clear picture of what you want in retirement and track your spending now so that you know how much retirement will cost. The key takeaway here is to create a retirement saving and spending plan specific to your lifestyle and your needs. While the general rule of thumb is that you will need 70-80% of your pre-retirement income to live on in retirement, that number may be more or less for you. Work with a professional to create a customized strategy so you are not scraping pennies together later in life.
3. Create Multiple Income Streams
Social Security is an important piece of your retirement income plan and you should create a claiming strategy to maximize your benefits, but did you know that the Social Security program was designed to replace just 40% of an average worker’s wages? (3) In other words, you’re going to need more than just Social Security to get through retirement.
Take stock of the tools available to get you to your retirement goal. What income sources do you have? This could be anything from IRAs to 401(k)s to pensions to annuities, even rental income or taxable brokerage accounts. It is important to analyze your alternative income sources and incorporate them into your overall retirement strategy.
4. Set Retirement Expectations
When it comes to retirement planning, a common mistake is to only focus on the financial side of things. Sure, it is great if you have enough money saved, but you cannot enjoy your retirement if you are not fulfilled. Most people find their identity in their careers, and when their career ends, they do not know what to do; they lose their feeling of purpose. Make a plan for your time in retirement so when you leave your job, you have something to look forward to. It could be travel, hobbies, volunteering, time with grandchildren, or even volunteer work. The important thing is to determine what your next step is going to be.
Experience A Fulfilling Retirement
We understand that deciding when and how to retire is a difficult decision, but you do not have to make the hard choices on your own. At Novi Wealth Partners, our top priority is to find out what your ideal retirement looks like and work with you to make it a reality. No matter what your situation, it is possible to enjoy your retirement and feel confident in your future. If you want to have a regret-free retirement, call (609) 921-7002 or email info@noviwealth.com.
About Novi Wealth Partners
Novi Wealth Partners is an independent, fee-only comprehensive financial planning firm dedicated to empowering clients to discover their definition of true wealth while providing the confidence to achieve it. With 20+ years of experience, we have found that most people don’t care about money, but instead, they care about what money can do for them and their loved ones. As a result, we focus on guiding our clients to find their unique vision for their life and developing a plan to help them live out their values. Our goal is to truly understand our clients on a personal level and help them navigate life’s many changes.
We are located in Princeton, New Jersey and we service clients both locally and nationally. There are four CERTIFIED FINANCIAL PLANNER® practitioners in the firm, all of whom are members of the prestigious National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA). We prioritize a team-based approach, which allows us to deliver comprehensive financial planning, investment management, tax planning advice, retirement planning, estate planning advice, risk management advice, and concierge level wealth management. We are committed to providing each of our clients a level of service as unique as they are and we are proud, as Fee-Only™ financial advisors, to offer unbiased financial expertise. To learn more about Novi Wealth Partners or to get started on your financial journey, visit our website or connect with us on LinkedIn.
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