This post contains opinion of Misook Yu and it may not apply to you . Consult a financial advisor to discuss your own situation.
Essential Factors in Retirement Planning
Age
Your age is one of the most important factors in determining how much you need to save monthly to reach your retirement goals. The younger you are, the more time you have; therefore, you can achieve your retirement goals with less monthly savings. On the contrary, the older and closer you are to retirement age, the more you need to save to reach your financial goals.
Social Security Benefits
This is an essential part of retirement income for most Americans. Know your estimated benefits (you need to verify to access your record). If you want to estimate quickly without accessing your record, click here to use the Social Security Quick Calculator.
Income You Need at Retirement
Know the amount of money you need in order to maintain your desired lifestyle after retirement. One of the biggest mistakes that people make is assuming that they need much less money after retirement. Many retirees say that they quickly realized they needed for more money than they had anticipated. We recommend our clients save as if they need 100% of their pre-retirement income. Calculate how much you need to save based on needs and time horizon.
Expected years to live after retirement
Although nobody knows how long you’ll live, you should assume that you’ll live at least the average life expectancy. If you are from a family with longevity, you should prepare for a longer life span. Expecting your maximum life span will help you better prepare for your retirement so that you don’t get caught off-guard.
Alternatives
Like many Americans, you may be in a situation in which you are not adequately prepared for retirement and have a slim chance of doing so. No matter the reasons, you must think of other options BEFORE you retire. You may need to delay your retirement age, downsize your life style, find a part-time job for extra income, or even all of the above. The key here is to know where you are now financially. See a financial advisor sooner rather than later.
Other things to consider
Although many issues that retirees face are related to lack of savings, there are other things to consider. Even if you are one of those lucky ones who are financially well prepared, for example, you may run into different issues that come from loss of regularity. What would you do everyday for the rest of your life? Eventually, traveling may become difficult as you age, and your grandchildren will grow up soon and may not need your help anymore. Experts recommend pre-retirees “practice” retirement. Read Forbe’s article on this subject here.