First step of retirement planning? Figure out your goals

Matt BauerRisk Management

Are you ready for retirement? There are a lot of calculators out there, from simple to complex, that claim to help you figure that out by crunching your numbers and spitting some back at you.

Knowing the numbers can be helpful to give you a basic idea of where you stand. (FYI, we like this calculator from Bankrate.) But numbers without context — especially those that require a healthy dose of assumptions and guesstimating — provide little insight.

Everyone’s situation is different. Some people are just focused on not outliving their money. Others are seeking to expand their range of experience as they age, and still others are most concerned about what they leave behind.

Do you want to travel the world? Do you plan to leave a financial legacy for your children, your friends, charitable organizations you’re passionate about? Dreaming of retiring to a relatively high cost area like Cape Cod or Hawaii?

Answers to these kind of questions will fuel the conversation about whether you are “on track” for a “secure” retirement.

Goals don’t have to be set in stone but they begin to form the equation of how much you need to save, what percentage of income you need to replace in retirement, and how much you can safely spend in the meantime.

As for tactics, some truisms apply to nearly everyone:

Only count on what you send ahead — Do not take Social Security for granted. Assume it won’t be there and think of saving for retirement as sending supplies ahead before your journey begins.

Pay yourself first — Take advantage of employer sponsored retirement savings plans to put saving and investing on autopilot.

Don’t obsess over taxes — You can’t predict what tax rates you’ll be subject to in the future, especially if retirement is decades away. Sleep soundly and diversify your tax exposure by holding both tax-deferred and tax-free accounts.

Find room for a Roth IRA — We adore the Roth IRA for tax free growth, unlimited investing options, and the ability to serve as a backdoor emergency fund. (More on this in a future blog.) For nearly everyone eligible to contribute, a Roth should be retirement plan bedrock.

These are just some of the very basics. At Sinclair Risk & Financial, we analyze your specific situation and help design a retirement plan tailored just for you…once you have your goals in place. Spend some time early in the New Year thinking about your ideal future and give us a call to help make it happen.

Matt Bauer