Your Retirement: Make it a Success

 

What do you feel when you hear the word retirement — joy or panic? Your reaction may depend on several factors such as how close you are to retirement, how well you’ve prepared and what you plan on doing during retirement. Most articles you read about retirement, advise you to start saving as soon as you can and put in as much as you can and increase your contributions over the years to maximize the compounding effect. Getting ready for retirement involves more than simply accumulating enough money. To avoid mistakes that can haunt your retirement years, also make sure you consider the following in your planning.

YOUR DEBT. Personal loans and credit card payments can take a big chunk of your income if you carry the balances into retirement. Failing to pay down or eliminate high-interest debt before you retire is a mistake you should avoid. Ridding yourself of debt is one of the easiest ways to boost your income in retirement.

YOUR INCOME NEEDS. Your expenses in retirement may change, but different doesn’t necessarily mean lower. Another mistake retirees make is being unrealistic about their income needs because they assume their expenses will go down. Some expenses will go down when you are retired, although you won’t have job-related expenditures, you may spend more on health care and leisure activities (traveling can get expensive). Think carefully about the things you’ll need money for and plan accordingly.

YOUR WITHDRAWAL RATE. Several factors are likely to affect how long your money lasts, including the rate at which you withdraw assets from your accounts, your investments’ performance, and the inflation rate. While you can’t control investment performance or the rate of inflation, you can control your withdrawal rate. Choosing a rate that’s too high can quickly deplete your assets. Selecting a more conservative withdrawal rate can help make your money last. Start with a smaller amount of monthly benefits. It’s easier to increase the amount if needed, rather than to be used to an income and try and scale it back.

YOUR ASSET ALLOCATION. Throughout your investing life, the mix of stocks, bonds, and cash you hold in your portfolio may have the greatest impact on how long your nest egg will last. Although stock volatility is always an issue, investing too conservatively may keep you from earning returns that will help you reach your goals. Choosing an investment strategy that helps your investments not only keep up with inflation, but actually beats inflation will keep your account growing during retirement without taking too much risk. Consider leaving a portion of your portfolio invested in stocks, even after retirement, to provide growth potential.

If you have any questions or would like to talk to one of our retirement plan team members, the Retirement Specialists at First Merchants Private Wealth Advisors are here to help:

First Merchants Private Wealth Advisors products are not FDIC insured, are not deposits of First Merchants Bank, are not guaranteed by any federal government agency, and may lose value. Investments are not guaranteed by First Merchants Bank and are not insured by any government agency. This material has been prepared solely for informational purposes. First Merchants shall not be liable for any errors or delays in the data or information, or for any actions taken in reliance thereon. Any views or opinions in this message are solely those of the author and do not necessarily represent those of the organization.