As Halloween approaches tomorrow, we reminisce on our childhood fears of ghosts and goblins. However, as adults we develop new fears — specifically about our financial futures.
According to a recent Allianz poll, out of 3,000 people, nearly two-thirds fear running out of money in retirement over meeting the Grim Reaper. With October being National Financial Planning Month, now is a good time to ensure your nest egg is big enough to support you through your golden years.
First, ask yourself two questions:
1. Are you saving for retirement?
If yes, that’s a great start!
2. Are you planning for retirement?
If the answer is no, below are a few reasons why you might want to start.
Just Saving Is Not Enough
Due to extremely low interest rates, if you have money just sitting in a savings account, it typically doesn’t grow very much. In some cases, due to inflation, those dollars may not even grow enough to support you in retirement, leaving you at a long-term financial disadvantage.
The good news is very few Americans retire on their savings alone. Most people invest some of their savings and will retire on the accumulated earnings their investments generate over time.
Investing Without Planning is a Crapshoot
Generally, people invest with the ultimate goal of building wealth, particularly for retirement. But too many Americans invest without a fleshed-out plan. Without a plan, you can only guess how much money you will need in retirement — and chances are, that guess is off.
A good financial plan is created with the help of an experienced financial professional, who can help you address priorities — such as managing risk and deferring or reducing your taxes — while defining your personalized investment approach. A financial plan is constantly evolving as it should change over time to reflect the changes in your life and financial objectives.
Don’t be spooked by the ghosts of your financial past. Halloween is a time full of freights and terrors, but your financial plan doesn’t have to be one of them. Even though October is drawing to a close, there’s no time like the present to get your long-term goals on track. The new year is approaching faster than we think and it’s important to contemplate the things we’ve done in the past and what we want to do in the future.
Personal Capital’s tools like the Retirement Planner are great places to start building a plan. With these tools you can set short-term and long-term financial goals and create benchmarks allowing you to see the distance between where you are now and where you need to be financially.
Amin Dabit, CFP®
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