The Art of Planning Your Retirement
Take a deep breath and relax. Retirement planning can be stressful and overwhelming, but it should be a time of excitement as we imagine and pursue our ideal future. We are being asked to plan the last 1/3rd of our lives before we get there. That’s a big task that requires time and patience, but this can be the time in our life where many of us leave a great mark on society and those around us. Claude Monet didn’t start to create what he thought was his greatest work until he was in his 60’s. Henri Matisse was still painting well into his 80’s. Planning early and often in your career can take some of the pressure away from wondering where we are at as we slowly approach retirement. Here are some ways to approach retirement planning in a relaxed and confident way.
- Where’s Waldo?
If you have ever done a where’s Waldo book, you know there are a lot of distractions pulling your eyes in different directions. It can be hard to ignore the noise and find the man in the red and white striped shirt. Similarly, finding good information sources can be like finding a needle in a haystack. We live in the information age, the problem we have now is that a lot of it isn’t helpful. We have to focus on the right things and make sure that the information we use to make decisions lines up with our long term goals.
If our investments are meant to support our retirement plan for the last 1/3rd or so of our lives, the 24/7 news cycle can make it difficult to focus on the long term results. As in most areas of life, the best information isn’t always the most entertaining, but sometimes we need to look at 5, 10 or 20 year periods to see the big picture instead of 24 hour news cycles. Look for a handful of sources you can trust to help you plan for the long term and keep you focused in times of volatility or uncertainty.
- Don’t Build Your House in One Day
Retirement planning is a lot like building a house. Since we want it to last for a long time, it can take great effort to plan something that is structurally sound and built to last. It is a huge task that must be broken up into tiny bite size pieces. This should be a relief because it doesn’t need to be completed in one ultra long stressful think session. A retirement plan is really more of a process you go through over time to help you match your hopes and dreams for the future to your economic reality. The earlier we plan, the better we can build a bridge from our current reality to our ideal future. The reality is that we are all planning for our future all the time. Decisions about our mortgage, life insurance, investments, budgeting etc. will have an impact on the next stage of our life and those decisions will build on each other over time. It is important to recognize that we may be flying blind without considering how our decisions might affect our long term goals.
Once we have a plan, it will change with us over time and we will continue to fix or change the plan to suit our long term needs. In todays world, retirement takes on many different meanings. It can mean that we keep working but with more flexibility, work at a job we enjoy more for less pay, or we remain active but pursue activities that recharge us. The odds say that many of us will live into our 90’s. This kind of timeline allows us to pursue an entirely unique legacy in retirement as we use the resources we have built to make a lasting impact and create a fulfilling and enjoyable retirement.
- Pick the Lowest Hanging Fruit First
Retirement planning is multi-faceted but most of us have a few important things we can do immediately to maximize the foundation of our plan and start steering us towards that future ideal life. If you work at Michigan State, your 403(b) is a great place to start as it can be a very important part of your long term plan. Spend some time understanding all of your options for investing in the plan and maximizing the resources provided to you. You can use Fidelity or TIAA as a resource or hire a local financial planner to help you manage your investment options and start the planning process. A few key questions to start asking right away might be: Do I fully understand the University’s matching policy? Does it make more sense to stick with the core investment options or use a self-directed brokerage account? Should I fund a Roth IRA in addition to my 403(b)? As you increase your knowledge level in this area it will empower you to tackle the next steps in a methodical and confident way.
Retirement planning is about using your resources to fund a life with less things we have to do and more things we want to do. This means we get to dream a bit about what that life might look like. Take some time to enjoy thinking through what your ideal life might be. From there, ask what it would take to get from your current working life to that future ideal life. Maybe not much would change, or maybe everything would be different, but at least you know what you are aiming for. The earlier you begin to plan in your journey the easier it is to do the things required to steer the ship in the right direction.
This article was written by Retirement Legacy Group, a local financial planning firm who has been in the area for over 40 years. Learn more about what they do at www.retirementlegacy.com/403b.
Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and Retirement Legacy Group are separate entities from LPL Financial.