When it comes to retirement, the earlier you start planning, the more comfortable your golden years will be. Knowing where to begin, how to track your progress, and when to lean on an advisor are all tricky yet important decisions on your road to retirement.
Whether you are a financial planning novice, a few years into your savings roadmap, or have been preparing your finances for decades, this blog outlines why setting clear goals may be the key to a successful retirement journey.
Let’s walk through how you can develop long-term strategies, mid-term goals, and short-term tactics – and why an advisor like StrategicPoint can help set up a financial boost no matter your stage of life.
Long-Term Goal: Save Wisely
The nice part about setting long-term financial goals is that time is on your side.
Time is a powerful tool. It allows for a more thoughtful approach to saving (and planning in general). A long-term savings goal – typically with a period of 10 plus years – includes saving in the right places.
A full decade of strategic saving will result in a diverse blend of account types, including pre-tax savings in a 401(k) or traditional IRA, post-tax retirement savings in a Roth, and non-qualified accounts such as an individual, joint, or trust. This array of savings jars offers greater tax flexibility later in life. Most high-net-worth individuals are not maintaining all their savings in cash. According to a 2023 Gallup survey, 61% of Americans are putting money toward stock investments (a trend that has risen in recent years).
Don’t Overgrow Your 401(k)
One of the most prominent retirement savings methods is building a robust 401(k). Certainly, this tactic should be a part of your overall approach, but don’t put all your eggs into this account. We’ve outlined why your 401(k) balance might actually be too high.
With long-term savings goals, the power of time is especially impressive with generational planning – saving in ways that have the greatest impact for your future generations. At StrategicPoint, we also know long-term goals provide breathing room for our clients, reducing stress often associated with financial planning.
Let us move from long-term financial planning and talk about slightly smaller goals.
Mid-Term Goal: Follow a Financial Plan
If retirement is 10 or less years away, how can you be certain you are on track to meet growth expectations and savings objectives?
Establishing a holistic financial plan is important to measure whether you are on track to retire on time – and if not, the specific actions needed to get you up to speed. A plan – like the customized roadmaps designed by StrategicPoint – reinforces certain assumptions you may have about your financial standings, such as your portfolio growth expectations, savings structure, and desired spending in retirement.
Wiggle room for contingencies also rolls into a financial plan, instilling a greater sense of confidence knowing you are better prepared for any unpredicted costs in your golden years.
Many folks might already be aware of steps they should take within a financial plan, but this mid-term planning goal should also specify the order of steps and how much time and money to exert into each milestone. Moreover, a plan paired with the support of a financial advisor provides you with a personalized approach which may help you reach retirement goals faster.
Can you retire faster with an advisor’s help?
According to Northwestern Mutual’s 2024 financial research study, Americans partnering with an advisor expect to expedite their road to retirement by two years – and double their savings heading into their golden years.
Per the study: “Nearly two in three Americans with an advisor (62%) say they know how much they need to save in order to retire comfortably, while about one in three without an advisor (34%) agree.”
We have talked about long- and mid-term goals, but what financial decisions can you make right now?
Short-Term Goal: Map Out Your Cash Flows
What can you start tackling in a year or less?
One component of your plan – cash flow planning – is a tactic you should continually reevaluate with your current balances. As outlined in Investopedia, cash flow planning is the evaluation of all your money coming in and going out. By looking at your earnings and expenses, you can avoid going too far into debt, save up a proper emergency fund, and consider other short-term financial objectives along the way.
Consider cash flow planning as a way to fine tune your budget. Once you determine your sources of spending, you are in the driver’s seat when it comes to tax planning and many other financial strategies.
Transitioning to Retirement is a Financial (and Mental) Process
For those whose golden years are still far away, the idea of retirement is a coveted goal to reach. Yet when the time comes, it is often a difficult mindset and process to transition into. Whether you are on the precipice of retirement or navigating the challenges of building wealth while simultaneously saving and managing the expenses of life, we are here to help.
If you are not currently being supported with the planning needed to put your mind at ease, reach out to a StrategicPoint advisor and let’s kickstart (or improve) your financial planning toward retirement.
Kristina Mello, MBA serves as Senior Advisor and Director of Financial Planning at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail her at kmello@strategicpoint.com.
The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Kristina’s opinions and comments expressed on this site are her own and may not accurately reflect those of the firm or our parent company, Focus Financial Partners. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.
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