The Time to Plan for Retirement Is Now

Some of us are procrastinators. Anything that isn’t critical gets put on the back burner to address another day. For many tasks, putting them off won’t greatly affect your future. However, delaying retirement planning too long can significantly affect your lifestyle during your golden years.

There is a frequent perception (or misperception) that retirement planning is something you undertake once you decide you want to stop working. Perhaps this occurs because you’ve become disgruntled with your job, incurred some unexpected health issues and/or your spouse has decided to leave the workforce.

Another common misperception is that you should retire based on dates that the government has arbitrarily set. Social Security, which has set dates for benefit eligibility, is a prime example. You are allowed to obtain Social Security benefits starting at age 62 (albeit at a much-discounted rate). Just because you can receive some money at that age doesn’t mean that doing so is the best option. Expected Social Security payments are just one factor in determining whether you can afford to retire. Indeed, relying on Social Security as your primary income source may lead to a disappointing lifestyle.

Retirement planning means understanding the income and assets you will need to support your lifestyle and remain independent. Obtaining that knowledge now allows you to allocate your resources so you can save and invest for the future but still pay current expenses. In other words, a good retirement plan helps you balance the competing demands on your income, such as saving for retirement, raising your family, paying for college and enjoying life now.

It takes years, not months, of saving and investing to accumulate enough funds to pay for everything you want and need once your regular paychecks have stopped. It takes discipline and a prioritization of your needs, wants and wishes to look forward and not spend it all on today. If you are tired of working now, just think how hard it will be to go back to work down the road if you run out of money in retirement. After all, you will likely still want to eat out, travel to see family and friends and maintain your home when you are in your 70s and 80s.

Consider how your expenses will change once you retire. You may incur costs that formerly were covered by your employer. Health care and long-term care costs can take a large chunk out of your budget. If you retire before you are eligible for Medicare, know what your health insurance premiums will be. Even if you are on Medicare, you will still incur premium costs and out-of-pocket health-care expenses.

With good intentions, we often buy things on credit because our current paycheck permits us to make the necessary payments. Low interest rates are very enticing, and buying new cars, RVs or homes right before retirement can seem like a good idea. If these loans continue beyond retirement, consider how the payments will be made before you make a purchase.

If you have been delaying planning for retirement, get started now and identify your goals, before you turn in your resignation. Once you are out of the workforce, it is much harder to get back in at the same level. You can always consider a career change or working part-time to supplement your income. Being happy and healthy is important, too. It’s vital to balance your current situation with your potential retirement scenario when making decisions.

This commentary originally appeared August 6 on TheCasperStarTribune.com

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The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

© 2016, The BAM ALLIANCE

Connie Brezik, CPA/PFS, CFP®

As a wealth advisor at Buckingham Strategic Wealth, Connie works with clients to form a comprehensive financial plan tailored to their individual circumstances, one that includes portfolio management, tax strategies, wealth transfer considerations, retirement analysis and education planning. She welcomes the chance to help clients work through difficult situations, finding solutions that they may not have thought of and guidance about what to do if their plans don't work out as anticipated.

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