5 Key Retirement Plan Steps To Ensure a Happy and Secure Retirement

Creating a comprehensive retirement plan can be challenging and daunting, but the key to ensuring a happy and secure retirement is by preparing and future-proofing the finances to fund it. Retirees also need to remember that retirement planning is a multistep process with many considerations, and a successful retirement plan doesn’t get sorted out in one day—it’s constantly changing and adapting over time.

In this article, we will run through our top five retirement plan steps you need to take to help you reach your retirement goals—and a happier and more fulfilled future.

1.Assess Your Time Horizon

It’s very important to understand how your current age and estimated retirement age can determine your overall retirement strategy. We will break down some points to consider for both older and younger retirement planners:

a) Younger Retirement Planners

Younger financial planners have access to more time in their retirement plans, giving them more freedom with their investments to be risky (such as stocks/shares). This is mainly because stocks have shown to outperform other securities over longer periods of time.

b) Older Retirement Planners

On the other hand, older planners are generally advised to focus more on short-term goals such as their capital preservation and overall income. For example, allocating more in less risky securities that are less volatile (such as bonds). Although these securities won’t give the same returns as stocks, they can provide an income that is suitable to live on in the nearer future.

2. Evaluate Your Spending Needs in Retirement

Sitting down and outlining realistic expectations and goals about your retirement spending will help you to evaluate the size of your retirement portfolio and give you an idea for how much you need to additionally save today to meet those requirements. It’s important to remember that retirees will no longer be tied to 40-hour working weeks, giving them much more time to engage in their desired retirement activities.

Not only that, but it’s important to consider that as the average life expectancy in the US is increasing to an all time high of 85.6 years in 2060, meaning retirees need to consider their overall longevity so you don’t outlast your savings.

3. Calculate The After-Tax Rate

After taking into account points 1 + 2 above, the after-tax rate of investment returns needs to be calculated in order to assess whether portfolios will produce the needed income for the future.

Please note that investment returns are typically taxed, depending on the type of retirement account you hold. Therefore, the actual rate of return needs to be calculated on an after-tax basis.

4. Balancing Risk Aversion & Return Objectives

One of the most important parts of retirement planning is ensuring a proper portfolio allocation that correctly balances the concerns of risk aversion and returns objectives. It’s advised to ensure retirees are comfortable with the risks being taken in their portfolios and what is absolutely necessary.

For example, if the numerous mutual funds in portfolios have a bad year, add more money to them. Also, retirees shouldn’t bail out on lower-performing funds, as they may be the top performers in the next year.

5.Don’t Forget Estate Planning

Lastly, it’s essential to not forget about estate planning as this (along with life insurance) will ensure assets are distributed under the terms set by each retiree. This will give assurance that loved ones will not experience any financial hardship after a person’s passing. We will be happy to work with you and your legal or tax professional on your Estate Planning.

Looking for Advice?

If you’re looking for solid and transparent investment advice, get in touch with the team at Brite Advisors USA.

We believe at the heart of a great relationship is working together with your trusted Brite Advisor to achieve your goals. We focus on acting in your best interest and building a fruitful, long-term relationship you can rely on.

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