Check all of these “boxes” on our retirement planning checklist.
It takes time and detail to construct a complete financial plan for your retirement. Here’s a retirement checklist that can help you reduce stress as you head into those years.
Social Security was never intended as a full retirement income replacement. Instead, think of it as one piece of your retirement plan, hopefully supplying about one-third of your pre-retirement income. The rest could come from a combination of retirement savings such as 401(k) and IRA accounts.
One of the things you need to ask yourself about Social Security is: What age will you claim your benefits? You can begin collecting as early as age 62 or wait until age 70 (known as full retirement age). The longer you wait to claim, the more you’ll earn per year. Claim before full retirement age, though, and you’ll permanently reduce your benefits. In fact, claiming at age 62 may reduce your benefit amount by up to 30%.
Talk to your financial professional for more insights.
One of the most impactful pieces of your retirement savings is the investment return on your portfolio. You may see an average rate of return of 6% over time.
People are living longer. In the past three decades, life expectancy rates for men in this country have slowly increased from 72 to 75 for men and 79 to 81 for women.
And as you’re thinking about how to help loved ones, you may consider life insurance needs. Before retirement, life insurance offers help to your beneficiaries should you unexpectedly pass away. In retirement, you may decide you no longer need life insurance.
The cost of goods and services goes up over time; in some periods the rate of inflation is higher than in other periods. Your retirement planning will need to accommodate that the dollars you have today may have less purchasing power in the future. Some investments may help you withstand inflationary pressures better than others. You can’t know for certain what prices in the grocery store are going to look like decades in the future, but you can work toward a budget that helps you manage your spending and allows you to consistently contribute to savings. Your financial professional can help with a strategy for you.
The best way to calculate spending is by looking at your total income and subtracting major expenses such as your mortgage payment, savings rate, and property taxes. The amount left can be thought of as your lifestyle expense.
Measuring lifestyle expenses before retirement helps create a more accurate financial plan. Although it’s commonly said that you’ll spend less in retirement, some people don’t. That’s why it’s important to know your baseline today.
It can be difficult to work through all the ins and outs of both short- and long-term financial retirement strategies. A financial professional can help plotting out budgeting, saving strategies, and realistic goal setting.
Track how well you’re progressing toward your retirement savings goal with a personalized Retirement Wellness Score (login required). Or, if you don’t have an account with Principal®, visit the public Retirement Wellness Planner.
