How To Make Sure You Have Enough For Retirement

Many Americans are surprised to see they have not prepared as well as they had hoped for retirement when they finally get ready to call it quits. Having a medical condition certainly does not help the situation either. 
 
The good news is you have time, especially if you’re still working, and have another five to seven years. If you’re lucky enough to have a pension, which is something many Americans these days cannot rely on, you’re also off to a good start. 

The bad news is, you may have to make some realistic assumptions of what your retirement will look like. If you’ve lived primarily paycheck to paycheck in your working years, that may continue to feel like the case in your retirement. 

Think very carefully about the sort of income you’ll be receiving until you can begin claiming Social Security at whatever age that should be. If you retire and your spouse is still working, you may want to try and rely solely on his/her income for a while as opposed to taking social security or dipping into your 401(K), so that the money in there can continue to grow over time. It is hard to tell how long anyone will live, but you should plan to live a couple more decades at least, and you’ll need all the savings you have to last that timeframe. 

For most people, filling in that income stream gap can also be achieved with a fixed index annuity, which can take an asset like your 401(k), and turn it into a lifetime income stream for you. 

Whether you’ll be able to live a comfortable and simple lifestyle in your retirement depends largely on how you’re planning. Assess how much income you’re bringing in now and compare it to what you will be getting from your account withdrawals and Social Security, when the time comes.

Also make realistic assumptions for how much everything will cost in your retirement – your housing and utility bills, groceries, healthcare, taxes, and some of the fun stuff. You have worked all these years, you and your spouse deserve to enjoy this next chapter. 

We can help further by providing a few useful tips. First, try using an annual withdrawal rate of 3% from your qualified retirement accounts. 

Then see how much you can expect to get from Social Security. You can do this by making an account on the Social Security Administration’s website. You’ll be able to view your work and earnings history (which is important—your benefits are based on that, and you want it to be accurate), and you’ll also get an estimate for your benefits at various claiming ages. Add those numbers together and see what you get. How does that compare to the amount of money you’re bringing in now, and will it cover the bills and then some for the future? If not, seek the help from an annuity expert to see if an income annuity could help. 

Next, live within your means. A few other suggestions include not putting extra payments toward the house, especially if you have a low interest rate. If you’re able to pay the mortgage, just keep doing what you're doing, and stash away any excess money for your future. The equity in your house is important, but that money becomes illiquid when you put it towards your mortgage, and you may want to focus on assets you can easily tap into because one crucial account you’ll need, for now and in retirement, is an emergency fund.  

As for your cars, now may be a good time to sell. The current auto economy is a seller’s market, quoted by Ford, and you may be able to sell them for a higher price now than in a few years when interest rates jump and supply chain issues are less of a problem.  

Also, consider reviewing your 401(k)- asset allocation. Even if you’re not aggressively invested, it may still require a review. Bond values are not too hot these days and riskier investments can lose money. If you’ve tuned into the news at all, you’ll likely see that the stock market has been hit hard lately, with inflation and the war between Ukraine and Russia, you may want to find a financial professional who can offer you safe strategies to "stop the bleeding" in your accounts ASAP.  

Finally, be conscientious of your spending habits and how they affect your savings. Money is a very personal topic, and everyone approaches it differently based on how they view it, which may be the result of how they were raised or what they saw happen to their parents, their grandparents, or their peers during major financial events (i.e the 2008 housing crisis). Savers may always feel a reluctance to spend and spenders might find trouble fighting the desire to splurge, but small, meaningful changes are possible.  
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At Summerlin Benefits Consulting we help clients protect the assets they have and prepare for the future with what they have saved.