Are you planning for your retirement? If so, one great tip that I have learned over the years is that you should always be prepared for the unexpected.
I know many of us expect to retire right around full retirement age, which is 66. Many of us also expect to be relatively healthy. While this could totally happen and things could pan out. For many, things will change and plans won't pan out. We need to make sure our retirement plan is set up and ready for these changes. Typically, we need to over plan and over budget for things. We need to have a bigger nest egg that has some good buffer in order to be able to withstand changes that will occur.
Your health might fail you and you may retire earlier than you expected. Your health my not fail you but maybe your employer will and you may get fired earlier than you expected pushing you into retirement earlier than full retirement. Being ready for these types of changes is very important.
According to EBRI, 47% of American retirees from a 2013 survey retired before they had planned to. Why? Mostly because of health or disability. These issues can and usually do spill over into the workplace and are also a factor in another big reason people retire earlier than expected, the loss of job.
If this happens to you what affect does this actually have on your retirement plans? For those who's retirement accounts don't have enough of in them to be able to cope with the earlier withdrawl they will more than likely need to take out social security before they planned. Taking out earlier than full retirement means a lower monthly check, which in turn means you'll have to take more out from your retirement accounts.
These are the facts! What can you do now to make sure you are able to cope with the unexpected?
Always reassess your retirement
Just because you set your retirement plan up once and are following the plan doesn't mean that current plan is still your best option. It is very wise to assess your plan on a yearly basis and make sure it is still correct for your current needs, wants and lifestyle. One great way to assess your plan is to do a yearly follow up with this retirement planning guide.
Plan for the unexpected
The more you think about these types of early retirement issues the better you will be able to face it if the issue really arises. Talk about your fears, issues and potential problems if something like this were to occur. If you talk about the issues you can and see how each fear or issue would affect you and your account. Not to mention if you plan for these issues and they do arise you will better be able to encounter them emotionally and everything won't seem as bad as if you had never talked about it before.
It is always very important to have an emergency fund of at least six months worth of money for your expenses. The bigger this fund can be the better but on a general rule you should shoot for six to twelve months of money for your expenses.
Lower Expenses and Debt
The more expenses and debt you have the harder all of this is on you. Do you best to cut out all the expenses and debt that you don't need. You will be surprised just how much you can cut out.
Maximize your contributions
Maximizing your contributions each year will allow you to better face any unexpected issues that may come up with your retirement. This is hard and many times requires a lot of effort on your part to budget out all of the unnecessary things you spend on. That way the money can go to your retirement rather than being wasted on wants that loose their cool newness factor after a few days or weeks of owning them.
Planning for retirement and implementing that plan is many times quite hard. Especially when you are trying to make sure you are doing the best things to make sure you have the best retirement possible all while still having a decent lifestyle today. The thing you need to remember though is that it is all possible and a little effort today makes for a much more relaxed and enjoyable retirement. Retirement is such a big part of our lives, so make the best of it.
If you would like to take control of your retirement and invest how you want we can help. It is so important these days to have a diversified retirement. Contact us for help making the best out of your retirement accounts.
Author: Nick Barker