What a year this has been for our economy, geopolitically and especially for the financial markets. For many people who are retiring or approaching retirement, these issues add up to some significant hurdles in preparing for their golden years.
For most of the past 13 years, markets have produced positive returns (opens in a new tab), according to Macrotrends, and thus gave many the feeling that their golden years would be full of financial security and stability. However, the events of this year seem to have caused many of those positive feelings to turn into anxiety and worry about what the future holds.
Getting ready for retirement shouldn’t be ignored, especially at times like this. Obstacles to taking appropriate action have apparently always existed. Whether it’s not taking the time to plan or even knowing where to start, preparing for the next phase of life must not be ignored, especially at times like these.
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Let’s explore some of these retirement barriers and possible solutions:
Retirement barrier: you are paralyzed by market volatility
Given that so much attention has been paid to financial market volatility recently, it can seem “all-consuming” to see our investment balances and future nest egg fluctuate at levels that many haven’t seen in years. . This makes many feel “paralyzed” to do anything other than “put their heads in the sand” until this volatility passes.
The solution: We’ve been saying it for years, butcontrol what you can control!“We really have no say in what is happening in the markets, but you can still take positive steps to develop and implement meaningful retirement strategies. Understand that your retirement could last for years, which means this probably won’t be the last time we’ll see markets like this, so let’s take steps to avoid potentially changing retirement in the future.
Retirement barrier: You don’t have a retirement mindset
Understand that your retirement is more than just a collection of “uncoordinated” investment accounts you’ve built up over the years. Retirement is moving from the “accumulation” phase of life to the “preservation and distribution” phase. Realize that there is very clear differences between being a good saver and knowing how to preserve and spend one’s wealth. Think about climbing Mount Everest and the different challenges of climbing that mountain versus descending it.
The solution: Agreement everything the areas of your own “financial house” and how you may need to take a more active approach to things that were once on “autopilot”. For example, during your working years, you had the opportunity to earn a salary. However, you will now need to “create” your retirement paychecks by combining the wealth you have accumulated, the Social Security schedule, and pension choices (if any).
In addition to managing investments, a solid retirement plan should include a plan for creating predictable monthly income, tax minimization strategies, healthcare options, and inheritance planning. Regardless of what’s happening in the financial markets right now, here are five areas of your retirement that you can plan for effectively.
Retirement barrier: you don’t know where to start
As with many other aspects of life, knowing how and where to start preparing for the transition to retirement can be the hardest part. Realize that you are part of the majority if this part of the process can feel overwhelming and make you procrastinate. Moving forward and taking small steps will help you build the momentum you need.
The solution: First, understand what exactly you need and what exactly you want to. For example, do you really want and are you engaged developing a comprehensive retirement plan that includes investment management, income planning, tax strategies, estate desires and health care? There’s a big difference between wanting and needing an advisor or portal to manage investment accounts or buy an insurance product. Once you’ve assessed and determined what you really need, you’re ready to tackle the next hurdle.
Retirement barrier: you don’t understand the world of consulting services and platforms
Not all advisors and platforms are created equal. Some platforms are suitable for those who prefer to self-manage their retirement versus those designed with a more complete offer of advice and services. Some of these may be low-cost investments for DIYers, those who want investment management for a fee, or those that are more comprehensive and planning-focused.
The solution: Let’s break down your options.
- DIY platforms. These are designed for those who prefer to manage their own retirement but need access to low cost brokerage accounts such as those offered by Vanguard. (opens in a new tab) and TD Ameritrade (opens in a new tab). Advice can be limited with these platforms and generally designed for those wishing to design their own investment strategies.
- Investment or product oriented. Many advisers offer services dedicated primarily to investment management. Advice may be given in return for a commission, which is usually a percentage of assets under management. Advisors could also focus their practice on offering insurance solutions and products such as annuities, life insurance, or even long-term care policies, which could have value if used. to meet a particular need.
- Focused on planning. Advisors who have a planning-focused practice will typically focus their efforts on designing, recommending, and implementing financial strategies that are more comprehensive than just investment management or product selection. Areas of focus typically relate to investment management, but may also include retirement income planning, tax strategies, healthcare and long-term care options, and estate considerations. Fees may include either an annual asset-based fee, a one-time planning fee, or a combination of both. In summary, advisors in this space normally focus on making recommendations and choosing solutions (both investment and insurance) based on your retirement as a whole.
Let’s focus on controlling what we can control and removing those barriers for a surprising retirement.
Investment advisory services offered by Trek Financial LLC, (Trek) an SEC-registered investment adviser. The information presented is for educational purposes only. It should not be construed as specific investment advice, does not take into consideration your specific circumstances and is not intended to make an offer or solicitation for the sale or purchase of securities or trading strategies. investment. Investments involve risk and are not guaranteed, and past performance is not indicative of future results. For specific tax advice on any strategy, consult a qualified tax practitioner before implementing any strategy described herein. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Financial products and services, if recommended, may include investment advisory fees, commissions and/or other fees. TREK 455
This article was written by and presents the views of our contributing advisor, not Kiplinger’s editorial staff. You can check advisor records with the SEC (opens in a new tab) or with FINRA (opens in a new tab).
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