By Randy Neumann
Although you probably read or hear about some “Top Ten” list every other day, take a moment to read this one. This list, which is very different from most, is probably not the kind of list you’d expect someone to write.
Reason #10: “I’m too busy.” I can’t tell you how often I hear this excuse. So many people want to plan for a comfortable retirement, yet they don’t make the effort to put the time aside. They think they’ll take care of it tomorrow or the day after that, but before they know it several years have gone by
and nothing has been accomplished. The best advice I can give you is to stop procrastinating and start planning today. Many people spend more time planning their annual vacation than they do planning their retirement without realizing that retirement may be the longest vacation they’ll ever take!
Reason #9: “It’s too soon.” I don’t know how this happened, but many people have adopted the notion that you don’t have to start planning for your retirement until the day before. This is totally incorrect. Truth told, the sooner you start planning, the better chance you stand of having the kind of retirement you want. It’s never too soon. Many people start planning in their early twenties!
Reason #8: “It’s too late.” If you’re already near or past your retirement eligibility date, you may think that however much you have accumulated is what you’re stuck with and it’s too late to do anything about it. Think again. If you’re unsure of what your options are, speak to a professional. Even if you’ve already retired, it’s important to consider how you’re receiving your income and how long it will last. It’s never too late to revise your income distribution strategy.
Reason #7: “I don’t need to.” I’ve heard this excuse many times and find it baffling. Many people think that because they’ve been diligent about contributing to a savings account, they’re all set. While saving for retirement is good, you also need a plan for income distribution once you begin retirement. Are you certain that what you’re saving will be enough? Have you considered your distribution plan? What about taxes? What about inflation? And, are you sure your money is in the right place? There may be other, better options for you; therefore, it may prove worthwhile to look into them.
Reason #6: “I don’t have enough money to get started.” This excuse seems marginal at first glance, but there is some truth behind it. You need to have money to save or invest. However, unless your bills are exactly equal to or greater than your net income, you do have enough to get started. Starting small is better than not starting at all, and if you plan well, you’ll eventually accumulate enough to work with.
Reason #5: “My finances are a mess.” This is all the more reason to seek out an advisor who can help you sort through and understand your assets. Perhaps you have a 401(k) from a former employer that has not been rolled over, a couple of savings accounts, a trust from a deceased relative, some stocks that your parents bought in your name when you were younger, etc. Although a situation like this can be confusing, leaving it as it is won’t improve your situation.
Reason #4: “The Government will take care of me.” The bottom line is this: There’s a chance Social Security may not be available when you retire, and even presuming that it is, it probably will not be enough to provide your ideal retirement income. If you are planning to retire on Social Security alone, I would advise you to create a back-up plan at the very least.
Reason #3: “Between my savings and my 401(k), I’ll be fine.” Saving for retirement without an income distribution plan can be a mistake. How will you use that money once you begin taking distributions? While you may think that you’ll have everything you’re going to need to live comfortably, have you considered inflation? Taxes? Long-term care expense? And furthermore, some people are living past 90. Will your assets last that long? What will happen if you outlive your income? It’s a good idea to look ahead and plan lifelong income.
Reason #2: “I don’t want to think about it.” Many people procrastinate simply because they find the thought of discussing financial matters (or growing old) to be troubling. I can certainly understand that. But consider this: If you bite the bullet now and put a firm plan in motion, you may not have to think about it again for quite some time.
Reason #1: “I don’t know how.” If you knew everything there was to know about retirement planning, you’d probably be a financial advisor yourself. While it is possible to do everything on your own, that generally involves a great deal of research and a huge time commitment. If you’re putting off retirement planning because you don’t know how, consider speaking to a professional who does.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for the individual. Randy Neumann, CFP® is a registered representative with and securities and insurance offered through LPL Financial. Member FINRA/SIPC. He can be reached at 12 Route 17N, Suite 115, Paramus, 201-291-9000.