After decades spent growing your career, you say goodbye to coworkers and retire to a life of leisure. This idyllic future may not become reality if your retirement plan is not on point. Before it becomes too late to prevent financial struggles into your senior years, beware of these 5 unexpected threats to your retirement plan.
1) Not Saving Enough
It seems obvious that your retirement won’t be the one you imagine if you don’t save enough money. Sometimes this occurs because of limited income, but it’s often a result of misunderstanding how much you’ll need to live comfortably.
Retirement in your 60s can leave you with 25 or more years for which to pay. Factor in healthcare costs and other expenses of aging, and you may be surprised at how much you truly need.
2) Relying On One Investment
No matter how well your investment fund is doing today, it could change at any time. Putting all your eggs in one basket leaves you with the chance of finding yourself with no gains. Diversify and take advice from a trusted source like Newbridge Wealth Management. We act in your best interest by implementing a plan tailored for you and offering low-cost investment choices.
3) Failure To Plan Withdrawals
Don’t hit retirement with the idea you’ll simply withdraw money as you need it. A proper withdrawal strategy not only makes your saved money last longer but can also reduce taxes and fees in some cases. Be sure to take required minimum distributions (RMDs) properly as well. Your RMD is the minimum amount you must withdraw from your account each year. You generally must start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 70½.
Look at your retirement plan just like you look at your yearly budget now. How many years can you afford to live at the same rate?
4) Unexpected Events, Expenses, And Inflation
Inflation is a constant and has hovered between 1% and 2.5% over the past decade. You must account for inflation in your retirement planning.
Unfortunately, sudden events or expenses are all but guaranteed. A medical crisis, natural disaster, divorce, or car accident can set your retirement plans back a bit.
Just as you did while working, maintain a separate emergency fund from your regular retirement investments. When you live on a fixed income, it’s wise to give yourself an additional buffer against extraneous expenses.
5) Changes To Family Structure
Other unexpected expenses or changes to the financial status quo may come in the form of family changes. A premature death can send a family into a financial tailspin, especially if life insurance isn’t available. The loss of a pension or Social Security payments also affects retirement planning. Other family changes can include caring for an elderly parent or grandparent, and adult children moving back home after their own life events or financial hardships.
Protect Your Retirement Plan From Threats
Now that you know about threats to a retirement plan, you can take steps to circumvent them. With proper planning and money management with Newbridge Wealth Management, you can retire comfortably. We believe in a patient, disciplined approach to investment management that delivers value and peace of mind with clarity to long-term goals. Email us at firstname.lastname@example.org or call 610.727.3960 to schedule a meeting or schedule a free 15-minute introductory phone call now!
Vincent R. Barbera, CFP®, MSFS is a managing partner and co-founder of Newbridge Wealth Management, a private financial counseling firm located in Berwyn, Pennsylvania. Believing in a patient, disciplined approach to investment management that delivers value and peace of mind, he utilizes a process-driven approach to financial planning that provides comfort and clarity to his clients’ long-term goals. Along with a bachelor’s degree in psychology and business, he has a master’s degree in business and financial planning and Certified Financial Planner™ designation. Learn more by connecting with Vincent on LinkedIn, or send him questions at email@example.com.