Finding financial confidence: How to get your finances on track before you retire
The transition into retirement can be both exciting and daunting, but how you’ll manage your finances is probably a big part of any stress you might be feeling. Will you be able to afford to do the things you want once you retire? Will your money last as long as you live? By planning and saving early, and actively thinking about what you want your retirement to look like, you’ll have a much better chance of answering these questions with a hardy, “Yes!” and in turn, helping find the financial confidence you need to live the life you want in retirement.
Below, we’ve provided a few ideas to help you continue to make progress toward your goals so you can make sure you’re on track to retire.
Revisit your financial plan
If you have a financial plan for retirement already, you may want to review it periodically, and at least annually, as you get closer to retirement to make sure it’s on track. Have your goals changed? Is your risk tolerance different than it was before? Will you be looking to start a new business or work part-time in retirement? Any changes in your lifestyle or your thinking may require a change to your retirement strategy. For example, you may want to talk to your financial professional about:
- Adjusting your investments so they get more conservative over time
- Consolidating your investments so you can more easily manage them
- Planning for lifetime income, possibly with an annuity that can generate a stream of income that can last as long as you live
- Ability to supplement your retirement savings with a permanent life insurance policy, if you think your 401(k), 403(b) or IRA might not be enough
Put together a retirement budget
One of the best ways to prepare for retirement is to put together a budget. If you know how much you’ll need to spend in retirement, you can more easily design a plan to accumulate enough money to meet those needs. So, think about the lifestyle you’ll want to live and the expenses you’ll have in retirement — both essential and nonessential — and how much those might increase in the future. Consider where you’ll live as you age, too — and start investigating locations and cost of living.
Develop a purpose plan
By age 50 or 55, we often see a shift in our thinking about the time we have left and a focus on what’s important and what brings us joy. If your work is your passion in life, retiring and not working may be a difficult transition for you. That’s why it’s so important to develop a purpose plan for later in life, understand how much it will cost you — or how much it will bring in income, if any — and integrate it into your financial plan for retirement.
Plan for the care you want
Most of us will need long-term care at some point in our lives. With long-term care costs increasing, you will need to plan ahead to be able to afford the kind of care you’d like as you age. Since Medicare will not pay for most long-term care costs, consider a long-term care rider with a permanent life insurance policy. A living benefit, like an LTC rider*, can allow you to “accelerate” all or a portion of the policy’s death benefit to pay for long-term care expenses, giving you more flexibility to use the life insurance policy’s benefit when you need it most.
Talk to your family
It’s important to have honest conversations with your family about what you want in retirement and as you age, so they understand your needs and goals. You may also want to protect your family when you’re no longer around to help them with a will, trust or estate plan outlining your wishes and providing funds for those you love.
Meet with a financial professional
A financial professional can help you organize your financial picture, set up a savings and investing strategy, get out of debt and plan for big expenses — including retirement, which could potentially last 30 or more years. They can also help you plan for ways to supplement your retirement plan income and protect your family with products like permanent life insurance, which provide more ways to protect your family, minimize taxes and grow your money more quickly.
To build financial confidence, look at your life in retirement holistically — from where you’ll live and the lifestyle you’ll enjoy, to who will take care of you later in life and how you’ll pay for all of it. By planning ahead and getting your finances on track, you can look forward to your later years with confidence and enjoy the life you want in retirement.
*This is provided through a Long-term Care Servicessm rider, which is available for a additional charge. Additionally, there are restrictions and limitations. A client may qualify for the life insurance, but not the rider. It is paid as an acceleration of the death benefit.
Equitable is the brand name of Equitable Holdings, Inc. and its family of companies, including Equitable Financial Life Insurance Company (Equitable Financial) (NY, NY), Equitable Financial Life Insurance Company of America (MLOA), an AZ stock company with main administrative headquarters in Jersey City, NJ; Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI and TN); and Equitable Distributors, LLC.