Are there Gaps in your Retirement Planning?
“Working Americans have a very positive view of retirement: 84% expect to feel free to pursue their interests and hobbies, 77% expect to travel as they wish an 74% expect to feel financially secure.” (Source: The Retirement Crisis)
Did a certified financial planner or CPA analyze your retirement plan? Or did you work it out on your own? Regardless of how you formulated your retirement plan, chances are you may have a financial gap that could stop you from enjoying the fruits of your life-long labor. Don’t panic! Most people face a financial gap when planning for their retirement years. A financial gap or income gap merely means that there is a shortfall between your living expenses and your guaranteed income sources. Let’s examine how to close this gap including questions you should consider before you retire and actions you may want to take to be sure you do not struggle during your “Golden years.”
The number one fear in retirement planning is running out of money. Facing this fear means asking yourself some tough questions.
Will your retirement plan provide you with enough money to last throughout retirement? If the answer is, “I don’t know” or, worse yet, “I don’t think so,” then you have some further planning to do. Things that you may want to consider include:
- re-evaluating how much money you will need to live the desired lifestyle through the many years of retirement.
- considering which of your expenses you expect to eliminate or reduce and which will remain steady or increase.
- thinking about reducing expenses, increase income or a combination of both? Reducing expenses may mean refinancing your mortgage, moving to a less expensive neighborhood or downsizing to a smaller home. Increasing income might mean deciding to stay in the workforce longer than you had planned – or, if you’re covered by a pension plan at work, retiring and then seeking employment elsewhere, allowing you to receive a salary and your pension benefit at the same time.
Will your retirement plan provide you with the necessary funds to pay for long-term care expenses?
- Talk to a financial planner about protecting your property and larger possessions in the case that you end up in a long-term care facility. Will your home be used to pay for your care or will it be protected.
- Plan in advance with insurance that will cover your needed expenses. This may seem like a guessing game but online calculators and financial professionals can help you.
If you die before your spouse? Will your retirement plan continue to provide for your spouse? Will it be enough?
- Again, consulting a financial advisor can help settle these questions before there is an issue.