How to Prepare for Retirement

In this comprehensive video, Matthew del Junco, President of Financial Planning and Senior Wealth Advisor at Liberty Group, shares his knowledge on the changing face of retirement, providing valuable insights on how to effectively prepare for this pivotal phase of life.

To understand how much you need for retirement, let’s first look at the evolving landscape of retirement. In the past, retirement was a short-lived phase. But today, with longer life expectancies and changing economic factors, everything has changed. Back in the day, company pensions and Social Security were the go-to sources of retirement income. But now, the responsibility falls on you individuals to manage their retirement funds themselves. The decline of traditional pensions has made personal savings and investment strategies more crucial than ever. Thanks to medical advancements, we’re living longer than ever before. While that’s fantastic news, it also means we need a more substantial nest egg in order to cover the potentially longer retirement.

Determining your retirement savings needs is not a one-size-fits-all. Various factors come into play. So, let’s break them down.

Number one, lifestyle expectations.

Lifestyle choices during retirement can vary greatly. Some may opt for a modest retirement while others dream of a more luxurious lifestyle. Your travel, hobbies, and activities can also significantly affect your retirement budget.

Number two, current age and desired retirement age.

When you plan to retire is a crucial decision to make. Early retirement would require a larger nest egg, while a semi-retirement can offer additional income and delay tapping into your savings.

Number three, inflation.

Inflation is a silent wealth eroder. It’s essential to factor in historical inflation rates and future projections when calculating your retirement needs.

Number four, health care costs.

Rising healthcare costs are a significant concern in your retirement. You’ll need to plan for regular medical expenses and consider potential long-term care costs.

Number five, existing debts and liabilities.

Entering retirement with significant debts means you’ll need a higher income to cover your expenses. Clearing debts before retirement or factoring them into your retirement budget is essential.

Number six, Social Security and pensions.

Social Security and pensions can provide a substantial portion of your retirement income. It’s essential to understand what you are projected to receive and how it aligns with your expected costs.

Number seven, investment returns.

The performance of your investments significantly influences your retirement savings growth rate. Diversifying your portfolio and understanding historical asset performance can help shape your retirement strategy. Of course, at Liberty Group we are happy to help with your retirement planning.