November 30, 2020

You are putting money away for your retirement every month, and you may feel proud of yourself for thinking of your future. But if you are just blindly adding money to an IRA, 401K, or other accounts without thinking of how that money will work for you during your retirement, you may not be as prepared as you think you are. Traditional retirement planning isn’t always the best way to go. Looking at your retirement income as opposed to your lump savings is often a better way to go.

Traditional Retirement Plans Can Leave Much to be Desired

Focus on Income Planning

In traditional retirement planning, you’ll be saving toward a lump sum that you have either heard is a goal, or maybe have been told to do so by a financial advisor, and you’ll be counting on everything in your life going the way you’ve planned. You will save toward that lump sum, often blindly. Most plans do not take into account the possibility of disability, breaks in employment, variations in pay, or something crazy like a pandemic. As a result, many who save in this manner will retire with much less money than they’d hoped for. Thinking of it as a finite amount that has to last through the retirement years can be stressful. The money may begin to go more quickly than expected. In non-traditional retirement planning, you focus on retirement income planning. This planning takes your retirement goals into account, looks at your monthly budget, and focuses on how much you’ll have to live on monthly, and how long you’ll have that income.

Make Sure You Have Clear Goals

If you don’t have goals, how do you know how you’re doing? How do you know if you need to make a change? And how do you know when you’re done and ready to retire? The simple fact is, if you are just saving blindly, you don’t have a clear goal. Traditional retirement planning often follows this path, and because so many people join the “herd” of peers doing the same thing, they often feel like this must be the best way to go. If you have a financial team who focuses on addressing non-traditional retirement income planning, leveraging taxes to your advantage, and emphasizes the importance of becoming debt free before you retire, you will position yourself to enjoy the retirement you’ve worked so hard to achieve.

Go into Retirement Debt Free

If you have debt, your retirement won’t be as secure as you want. Allotting any of your retirement income toward debt payments will burn through your retirement savings much more quickly, and let’s be honest-you didn’t work so hard all those years just to pay debt. In the years leading to retirement, focus on getting all your debt, especially credit card debt, paid off. If you know that you will have to carry some debt into retirement, make sure that you have allotted for this expense in your monthly budget, so your retirement income planning can take that into account.

Making a Change Before It’s Too Late with the Right Financial Team

The best thing you can do for retirement planning is to find the right team to work with. If your financial team is only focused on a single dollar amount as your retirement savings goal and not talking about retirement income planning, make the change before it’s too late. Traditional retirement planning focuses on climbing to the top of the mountain. That’s good, but the problem is you then need to be able to get back down the mountain safely, and more deaths (or failures) happen on the way down than on the way up.

The right financial team can help identify your retirement goals, match those to the right kind of retirement income planning, and figure out what you’ll need to do in order to get there. If you wait until the last years before retirement, it may be too late to change your strategy. You are never too young to find a financial expert to help guide you towards a financial successful retirement.

We know how to get you where you want to be. We offer expert guidance through retirement income planning and have proven and trusted solutions to help you become debt free for life. Contact Safe Money Partners to start a conversation about your financial goals including your vision for financially successful retirement and what steps you can take now to help you get there.

photo of Jeff Mohlman

By Jeff Mohlman

Jeffrey has developed a comprehensive network of financial planning and estate planning experts who work for their client’s short-term and long-term goals. Today, the approach he incorporates for his clients follows three basic tenets: 1) being debt-free, 2) maximizing after-tax retirement income, and 3) protecting their estate from unforeseen risks.