Are you on track for retirement? How a financial plan can help you

Invest money for retirement It can be daunting, especially since it’s common for future retirees to worry about whether or not they’ll have enough money to last them through their golden years.

There are some general rules of thumb designed to help you determine where you are in retirement savings. An analysis found that you should have at least your annual salary saved at age 30 to be on track to retire at age 67. And at 40, there should be three times his annual salary saved.

Another strategy uses the 4% rule To help people calculate their retirement number: Simply multiply your annual expenses by 25 to find an “end goal” of how much money you need before you can retire with enough money to last you 30 years.

But before you try to start crunching numbers, there’s another important way to keep track of your retirement savings progress – and it’s probably the first strategy you should turn to. Liz Sheehan, Senior Vice President of Wealth Management at UBSrecommends developing a financial plan as you begin to think about retirement.

“Unfortunately, there are no shortcuts,” Sheehan says. “A comprehensive financial plan is the best way for someone to know if they are on the right track.”

A financial plan can give you a clear picture of which areas you are already achieving your goals in and which you need to focus on more. Part of making a good financial plan means being clear about the things that need Do and wish do like you work for retirement. For example, if you know you want travel the world in retirementYou’ll need a lot more money to float those travel expenses compared to an instance where your ideal retirement looks more like downsizing and moving to a low-cost-of-living area.

According to Sheehan, there are a few questions to consider when setting clear goals and a plan for retirement:

  • How do you imagine your life and your family in 10 years? 20 years? 30 years?
  • If you didn’t have to work, how would you spend your time?
  • What would you like to achieve with your wealth?
  • Are there any financial concerns that you would like to address through the financial planning process? (That is, you want to buy a house and/or how to pay for your child’s college)

Of course, planning for retirement is more than just figuring out how much money to invest each month. You will also want to consider other areas of potential change that you may encounter in life.

“Financial planning goes beyond the basics budget and looks at topics like insurance planning, liability management and estate planning,” says Sheehan. A financial plan should also include reviewing asset allocation, planning for children’s education (including how to pay tuition university), charitable planning and insurance analysis, he explains further.

Of course, you don’t have to try to answer all these questions and scenarios on your own. A financial planner it can help you navigate the process no matter where you are in life. You can also discuss what tools might be best for you to achieve your goals. For example, robotic advisors, such as versus wealth Y ImprovementIt automatically adjusts your investment portfolio allocation based on your goals and risk tolerance, so this could be a strong recommendation for someone who wants a more practical, yet still personalized approach to retirement investing.

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“Financial planning is a process, not something you do once in isolation and never get reviewed,” Sheehan explains. “I suggest clients review their financial plan once a year, or during every life change.”

Bottom line

A financial plan is one of the most important strategies you can use to determine whether or not you’re on track with your retirement goals, because the plan encompasses both qualitative and quantitative aspects of your goals. If you don’t know how to start creating a financial plan or what should go into your financial plan, a financial planner or advisor can help.

Editor’s note: The opinions, analyses, reviews, or recommendations expressed in this article are solely those of Select’s editorial staff and have not been reviewed, approved, or otherwise endorsed by any third party.

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