Historically, retirement evoked dreams of moving to a sunshine state, regularly playing golf, and relaxing. While some of those dreams may still apply to today’s seniors, the concept of retirement has evolved in the past few decades. A retirement plan full of leisure has transformed into an active lifestyle of pursuing passions, meaningful engagement with loved ones, and activities that are most important to the person retiring.

While people may have a unique vision for their retirement, there’s one thing everyone has in common: the need to plan ahead to make those dreams come true. While retirement can be an exciting life milestone to look forward to, it is important to ensure you have the proper arrangements in place ahead of time. Luckily, there are a variety of strategies that can help seniors with retirement planning. We’ve pulled together five helpful tips on navigating how to prepare for retirement.

Retirement Planning: The Basics

When planning for retirement, it’s never too early to start a roadmap. Whether you’re green in your career or nearing the end, there are always steps you can take toward a secure retirement. Here’s a look at things to consider when retiring:

  1. Set retirement goals. Your goals after retirement should include when you want to retire and ideas of what you want to do during retirement. Calculate your estimated retirement expenses, including cost of living, healthcare, travel, long-term care, insurance, and any other finances you think you’ll need during your golden years.
  2. Save and invest wisely. Invest in tax-advantaged retirement accounts — such as a 401(k) or IRA — as early as you’re financially stable to benefit from compound interest. Work with a financial advisor to help you develop a diversified portfolio. And remember: after you turn 50, you can participate in catch-up strategies to save even more during the last stretch of your career.
  3. Make a plan for Social Security benefits. Understand how Social Security benefits work and develop a plan for when you’ll start collecting your benefits. The longer you wait to start collecting Social Security, the more you’ll receive.
  4. Consider healthcare costs. Plan for healthcare expenses in your retirement goals, including insurance premiums, deductibles, and potential long-term care costs. You’ll want to explore Medicare and supplemental insurance options for retirees.
  5. Pay off debts. Try to pay off debts — such as your mortgage — before retiring to reduce financial stress during retirement.
  6. Work with a financial advisor. Bringing in a professional financial planner can help you create a personalized retirement plan based on your savings goals and retirement dreams.

5 Retirement Planning Tips

There are so many considerations to make when getting ready for retirement — from estimating your living expenses to guessing your life expectancy, it’s impossible to predict the future. However, these five planning tips are a surefire way to develop a retirement plan that accounts for the good, the bad, and even the unexpected.

1. Evaluate Your Retirement Goals

While creating retirement goals is a great first step in retirement planning, it’s essential to revisit your retirement goals as you progress in your career. Your salary may fluctuate throughout your career, and life has twists and turns along the way that impact how much you can save for retirement. It’s important to keep your retirement goals fluid to account for any gains or losses you experience as you save for retirement.

Take stock of your savings every year and determine if your current financial trajectory aligns with your retirement goals. If not, you may want to work with your financial planner to make adjustments to your savings strategy.

2. Create a Spending Plan

It may feel overwhelming to anticipate what your budget needs might be in retirement. Helpful tools, like online retirement calculators, can help you create a directional spending plan based on the age you wish to retire and how much you plan to save. Another valuable tip when developing a realistic spending plan is to create a list of needs by retirement stage:

  • Pre-retirement
  • Active retirement
  • Late retirement

By breaking retirement down into stages, it becomes more manageable to anticipate what your income and spending patterns may be.

3. Expect the Unexpected

You may have calculated exactly how much money you will need in retirement for you to live off once you stop working. But it’s important to remember that there will be factors outside of your control — like inflation, unforeseen medical costs, or a major home upgrade to accommodate changes in health — that can quickly deplete your retirement savings. Because of this, always save more money than you think you’ll need so you’ll have a cushion for unexpected life events.

4. Consider Your Investments

You may wonder: what types of income can you use in retirement to support yourself? A major element of retirement planning is making informed investment decisions. Your investment choices can significantly impact your retirement income and overall financial security. Here are some key strategies to consider alongside your financial planner:

  • Diversify your portfolio. Make sure to diversify your investments across different asset classes to mitigate market fluctuations.
  • Take advantage of tax-advantaged retirement accounts. These accounts offer tax benefits that can boost your savings over time.
  • Participate in catch-up contributions. If you’re 50 or older, take advantage of catch-up contributions allowed by retirement accounts. Pouring more money into your retirement savings can help you make up for any savings gaps.

5. Consult a Financial Advisor

Retirement planning can be an arduous process, so it is a good idea to consult a financial advisor who specializes in retirement planning. They can assess your unique financial situation and goals to create a retirement plan tailored to your needs. The retirement plans financial advisors create for clients can include:

  • Investment expertise that aligns with your risk tolerance.
  • Tax strategies to optimize your tax situation before and during retirement.
  • Social Security benefit recommendations.
  • A draw-down plan that ensures your savings lasts throughout your lifetime.

Most importantly, your financial advisor understands that life can be unpredictable. They can help you adapt your retirement plan when unexpected events occur, like health issues or changes in your family situation.

If you don’t already have a financial planner in your corner, take the time to interview potential advisors and select one that you’re confident will help you secure a fulfilling retirement.

Common Questions About Retirement Planning

As you craft a tailored retirement plan, you may have questions ruminating in your mind. You’re not alone. Here are some of the most common questions people have about retirement planning.

When Can You Retire?

Technically, you can retire at any age. However, there are some drawbacks to retiring too early, such as running out of money or having to cover healthcare costs until you qualify for Medicare. Here are some considerations to make as you decide the ideal age to retire:

  • If you retire before the age of 65, you are not eligible for Medicare and will need to pay for healthcare some other way.
  • Social Security recently raised full retirement benefit qualifications to age 67 (previously age 66) if you were born after 1960.
  • The 4% rule — a common retirement withdrawal strategy — is designed to last for roughly 30 years. If you retire earlier, you’ll want to adjust your withdrawal strategy accordingly.

Remember: everyone is running their own retirement race. Some may have the financial means to retire by age 45, while it may take someone else twenty more years of working. The name of the game is to avoid comparing your retirement plans to someone else’s and stay laser-focused on your retirement goals.

How Does Social Security Impact Retirement Planning?

Social Security is funded through payroll tax deductions, so from the first paycheck you receive in your life until your last, you are paying into the system. How much you pay into the system will determine how much you will receive in monthly Social Security benefits. The longer you work and/or the more you make—the higher benefit you will receive in the future. Here are some additional ways Social Security can impact your retirement plans:

1. Social Security is designed to supplement — not fund — your retirement income.
Social Security was never intended to be the sole source of income during retirement. It can certainly provide a steady stream of reliable income to help cover some of your living expenses during your golden years.

2. Timing matters.
The age at which you start claiming Social Security benefits can significantly impact your monthly payments. The longer you can wait to receive these benefits, the more you’ll receive every month. Consider your financial needs and goals when deciding when to start receiving benefits.

3. Factor in spousal benefits.
Married individuals may have options to maximize Social Security benefits through spousal claiming strategies. Consult with a financial advisor to explore these possibilities.

4. Understand tax implications.
Depending on your total income — and whether you decide to go back to work after you retire — your Social Security benefits may be subject to taxation. Work with a tax or financial advisor to help you plan ahead.

Is it Beneficial to Delay Retirement?

The short answer is: yes. Working longer means accumulating more income, which can be used for retirement savings. This can also help you delay your Social Security benefit for longer, which means you will end up receiving a higher monthly payout.

While delaying retirement can have several advantages, it may not be realistic for everyone. You’ll want to consider your health and whether or not it’s wise to keep working past the typical retirement age — especially if you work in a more physically demanding environment.

As you design your roadmap to retirement, remember that life can be unpredictable, and your plans should be adaptable to whatever lies ahead. Get your financial planner on board as early as possible to help you design a flexible retirement strategy that can flex as life changes in your golden years. At Retirement Genius, we’re here to provide support, resources, and smart financial strategies that help with planning for retirement. Reach out if you have questions about retirement planning. We’d be happy to share the resources we have with you. Remember: with the right planning and guidance, you can look forward to a retirement that’s not only financially secure but also fulfilling and enjoyable.