The pandemic and global economy has altered the lives of every American. Confidence in retirement starts with recognizing that today’s financial behaviors and progress made toward financial goals affect tomorrow’s outcomes.
The numbers are in: Results of a new 2022 Retirement Confidence survey finds Americans remain optimistic about living a comfortable retirement. However, a third of workers and half of retirees who feel less confident cite inflation and the cost of living as reasons for their declining retirement confidence.
If you’re afraid of what will happen to your future, it’s important to look beyond the headlines and consider your own resources and life goals.
Thankfully, you can increase stability in your retirement plan with careful and proactive planning. Here are some smart ways to boost confidence in your retirement investment plan and improve its chances of success.
1. Take advantage of employer contribution plans
Workers who had an employer contribution plan, like a 401(k) reported feeling more confident about paying for expenses and covering medical costs in retirement. So how do you get onboard?
All defined contribution plans basically work the same way. You decide how much you want to contribute, and your employer puts the money into your individual account on your behalf. This will allow your wealth to grow tax-free, and when harnessed with compound interest, these plans can grow your savings rather quickly.
Additionally, if your employer offers a match (where they partially or fully match your contributions up to a certain amount), it can provide a tremendous value. So if you haven’t done so already, sign up as soon as possible!
2. Figure out what you’ll need compared to what you already have
Many people underestimate how much money they will need to spend in retirement. Using a retirement calculator will help determine how much income will you need in your golden years.
Furthermore, take stock of all the money and assets that you have already saved. By looking over any investments you have you can make sure they align with your retirement goals.
If you’re not sure whether you’re on the right track to meet your retirement goals or how to build the right investment portfolios, consider speaking to an experienced Retirement Income advisor for help crafting a strategy that works best for you.
3. Make Your Money Grow
So you’ve saved up a solid nest egg and feel ready for retirement. Which is great! But it doesn’t stop there. Although retirement has changed dramatically over the last 25 years, you have more resources than ever to help you plan your retirement safely. And the greater your financial literacy, the greater the odds of a wealthy retirement.
With even a basic understanding of investments, you can help plan your retirement with confidence through strategic investing. The reason why millionaires are able to generate so much wealth, is because they have multiple income streams. In fact, research shows that on average, millionaires have 7 different income streams. So why would you “put all your eggs in one basket” per se?
Start by determining your potential sources of retirement income, and how much income they are likely to provide in retirement. Common income sources include:
- Guaranteed Income (i.e. Social Security, Annuities)
- Pension plans (i.e., defined benefit plans)
- Retirement savings, including 401(k), 403(b), and 457 plans
- Other nonretirement savings, including brokerage accounts, savings accounts and certificates of deposit (CDs)
Secondly, diversify these revenue sources. Because each retirement income category represents a different type of income, and mitigates different retirement risks, diversifying your retirement income across all three can help you generate income in retirement that may last a lifetime. These categories include:
- Dividend: Equity income investments.
- Interest: Bond and fixed income investments.
- Lifetime: Social Security and pensions.
Having multiple sources of income—including a portfolio structured to include an immediate annuity, a systematic withdrawal program, a bond ladder, a CD ladder, or a combination of these investments—can help safeguard your income if interest rates fall or one of your investments delivers less-than-expected returns.
4. Make the decision to start now
It doesn’t matter how old you are, enough of the “it’s too late – I should have started earlier” self-talk. If you want to put yourself on the path to retirement success, start saving and planning now.
When it comes to a retirement plan, there is no single way that everyone should allocate their savings. Most people don’t have a financial background so it’s hard to think about things like IRAs or investment portfolios, so seeking professional help can get you on the right track.
If you think finding a financial advisor may seem like a daunting task, the experienced advisors at CKS Summit Group are here to bring you fresh new ideas for your retirement income. Our cutting edge tactical portfolios help our clients achieve safe, healthy growth of their savings and preservation of their principal balance.
By taking action and setting up a complimentary strategy session with us today, you can have assurance and control over your financial future.