Financial Resilience: Preparing for Economic Downturns for Pre- and Post-Retirees
As we approach or settle into retirement, financial resilience becomes increasingly important. The ability to withstand economic downturns ensures that we can maintain our quality of life and achieve our retirement goals. This guide offers strategies specifically tailored for those between 55 and 75, helping you navigate economic uncertainties with confidence.
Building an Emergency Fund
A Safety Net for Peace of Mind
Having an emergency fund is crucial, especially in retirement. Here’s how to build and maintain it:
Assess Your Needs: Aim to save at least six months’ worth of living expenses. This should cover your essential costs, including housing, utilities, groceries, and healthcare. Given that medical expenses can be unpredictable, it’s wise to err on the side of caution and potentially save even more.
Secure Savings Accounts: Use a high-yield savings account or money market account for your emergency fund. These options provide better interest rates and easy access to your money. Unlike investments in the stock market, these accounts offer stability and immediate liquidity, which is crucial during emergencies.
Automate Contributions: Even in retirement, automating small monthly transfers from your checking account to your emergency fund can help it grow over time. Consider directing a portion of any supplemental income, such as dividends or part-time work earnings, into this fund.
In an era marked by economic fluctuations and rising living costs, Americans’ visions of a comfortable retirement are reaching new financial heights. Recent data suggests that the average American believes they will need approximately $1.46 million to retire comfortably, a figure that starkly contrasts with the actual savings most currently possess.
The $1.46 Million Benchmark
A 2024 study by Northwestern Mutual highlights a significant increase in the retirement ‘magic number’—the amount individuals believe they need to retire comfortably. This number has jumped to $1.46 million, up 15% from the previous year’s $1.27 million and a substantial 53% from the $951,000 reported in 2020. This uptick far outstrips the current inflation rate, suggesting that more than just economic indicators are at play.
Generational Expectations and Realities
The expectation varies notably across different generations. Gen Z and Millennials are setting the bar high, with targets over $1.6 million, driven perhaps by their longer anticipated lifespans and potentially more expensive retirement goals. In contrast, Gen Xers and Baby Boomers have somewhat lower expectations, though they are not insubstantial. Interestingly, high-net-worth individuals envision needing nearly $4 million, underscoring the varied perceptions of ‘comfortable’ retirement across economic brackets.
Despite these lofty aspirations, the average American has less than $89,000 saved for retirement, illustrating a daunting gap between dreams and reality (Northwestern Mutual). This disparity points to a potential crisis as populations age and savings lag behind needs.
Do you have a financial plan for retirement? Are you 100% confident in it, or could a second opinion on your retirement plan bring you some peace of mind?
At the very least, a second opinion can’t hurt. After all, retirement is very different from other stages of life. During their working years, people usually make goals around investing, which focuses on growing assets over time. On the other hand, retirement planning is about making sure those assets will pay a steady income stream throughout their golden years.
Of course, that isn’t the only thing that it’s homed in on. Forward-thinking retirement planning also covers protecting assets from various financial pitfalls that can arise, from chaotic market swings and rising inflation to unexpected medical emergencies and long-term care spending. Those assets need to last as long as you need them to generate retirement income.
If you are thinking about pursuing a second opinion for your financial situation, here are a few things to consider. We will talk about what a second opinion for retirement planning might look like, what to look out for, and some other things to keep in mind.
The term “aging in place” refers to how retirees wish to remain in their homes for their entire retirement, however long it may last. Aging in place is a growing trend and increasingly important for millions of Americans.
On the other hand, it’s also a hard goal to achieve. One major moving target in retirement is how our health needs evolve as we age. These changes can be especially impactful if we move into health situations requiring assisted living or other long-term care support.
According to a U.S. News & World Report survey, 9 in 10 adults aged 55 and up said it’s an important goal for them to be able to receive this care in their own homes, where they are comfortable and familiar, if at all possible. In this article, we will discuss aging in place and some other things to keep in mind, including:
What you should know about it,
Ways to create a sustainable plan that can make it possible, and
Potential pitfalls for planning for aging in place.
If your employer offers a guaranteed pension plan, then you may wonder whether it’s possible for you to retire early and still get your full pension benefits. Many pension plans follow the Rule of 85, which says that if your age and years of service to your employer total at least 85, then you can retire early without giving up any of your pension benefits.
This calculation is by no means universal. That being said, it’s probably among the most common formulas you will find in the pension arena today. In this article, we will go over the Rule of 85, how it works, what its limits are, and how you can use it in your retirement planning for income and other financial goals.
As retirement nears, it’s natural to think about whether you have adequately protected your money. After all, you have carefully saved and built up your nest egg over your working life. Protecting your money from creditors is only too real of a concern should a financial disaster happen.
The good news is, yes, most of your retirement assets are protected in one way or another. The bad news is that the protection is mostly a matter of state law. As a result, the details depend on where you live.
In this article, we will talk about the various creditor protections that you may have in retirement. Keep in mind that this is general information and isn’t intended to be legal advice. If you have any questions about your personal situation, talk to your financial professional and to an experienced attorney.
When a football team gets the ball inside the opposing team’s 20-yard line, they are considered to be in the “red zone.” There it’s more likely that they will score.
If you are within ten years of retirement (either before or after), then you are in what many financial professionals consider to be the “retirement red zone.” Famously coined by Prudential, the retirement red zone is a crucial stage for your long-term lifestyle.
Just as it’s critical that a football team can come away with points from the red zone, it’s also imperative that you manage your assets well during this critical period. Read More
The SECURE Act 2.0 is now law. In December 2022, Congress passed and President Biden signed this sweeping legislation that effectively overhauls much of the retirement landscape in America. The bill’s key provisions are centered around required minimum distributions, when they must be taken, and some changes to workplace retirement plans and retirement accounts.
On top of RMD changes, SECURE Act 2.0 also contains a great many changes to Roth savings accounts and how they can be used. The Roth rules have been expanded in an effort to increase current tax revenue, as Roth accounts are always funded with after-tax contributions.
Here, we will examine the key provisions of SECURE Act 2.0 and how they might affect retirement for you as well as your loved ones.
Are you looking for alternatives to a pension plan for guaranteed income in retirement? Perhaps you have a pension plan and worry about its future ability to make good on promised payments.
Pensions are becoming increasingly rare in corporate America today. Many private-sector employers have replaced pension plans with 401(k) or other profit-sharing plans to cut costs.
But if you are lucky enough to be privy to a pension plan, it’s important for you to know how it works, what you will get from it, and effective pension alternatives. And if you won’t be getting a pension, going over your alternative options can help you make well-informed decisions about retirement.
Let’s get into a deeper dive on pension plans, alternatives that are available and will pay you guaranteed income for life, and how these options look in the full spectrum of retirement planning.
Are you counting on a pension when you retire? Are you familiar with how it works? In this article, we will give a quick overview of how a pension plan works, different types of pension plans, and how payments from a pension plan to retirees work.
Once you have a better understanding of how your pension works, you will be in a better position to make well-informed choices about your overall retirement. That can include whether other sources of retirement income will help you reach your goals. Read on for a deeper dive into the basics of a pension plan and how it works.
Start a Conversation About Your Retirement What-Ifs
Start a Conversation About Your Retirement What-Ifs
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What Independent Guidance
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