Feelin’ Groovy? Slow Down. Don’t Move Too Fast Preparing for Retirement

It seems that we are “feeling groovy” these days about our retirement prospects. Groovier and groovier over the past few years in fact. The Employee Benefit Research Institute’s (EBRI) retirement confidence survey reports that the percentage of workers who feel very or somewhat confident about having enough money to live comfortably in retirement has been rising since 2009. However, there is reason to be cautious about our groovy outlook. We are still not really preparing for retirement enough. Perhaps the Simon and Garfunkel “Feelin’ Groovy” song lyrics might be a good anthem for retirement… and preparing for retirement:

Feeling Groovy — Retirement Confidence Is Rising

After the 2008 recession, many people didn’t have a very positive outlook on their future retirement, given market and real estate losses faced by many Americans. But we are becoming more confident, according to the ERBI 2018 Retirement Confidence Survey. Between 2009 and 2013, retirement confidence hit a record low with only 13 percent feeling very or somewhat prepared for retirement. Over the last nine years, our confidence has risen — somewhat.

• While only 17% of us feel very confident about retirement (down from a high of 22% in 2015).
• A full 64% feel very or somewhat confident (up from a low of 54% in 2009).

Another survey from Transamerica Center for Retirement Studies found that while 35 percent of retirees say they have only somewhat recovered from the 2008 economic downturn, 94 percent say they are generally happy and 90 percent say they are enjoying life, the survey states. Are you among those who has regained confidence? Are you feelin’ groovy? Or, are you beginning to worry about another crash or downturn?

Preparing for Retirement: Are You Moving Too Fast?

While you might be ready to “slow down” and really enjoy life. You don’t want to “move too fast” and retire too soon without preparing for retirement as much as possible. Both the EBRI and the Transamerica studies show that despite retirement confidence rising, some of us are not as prepared as we may think for retirement. Want to feel groovy and confident about retirement? Here are 7 things to think about as you get ready for this exciting phase of life:

1. Careful if you don’t have a lot of savings

A sizeable percentage of workers still report that they have very little or no money in savings and investments. In 2009, 75 percent of workers reported they and/or their spouse had saved for retirement, and while that number has declined, it still remains at 69 percent in 2016. Feeling like you have adequate resources is key to feeling confident about your future.

• You can find out how much you need for retirement with the Boldin Retirement Planner. You may find that there are many ways to make retirement work for you beyond just saving more.

2. Document and maintain a written retirement plan

“Among those who are confident about retirement, it’s overwhelmingly among those who have a retirement plan,” said Jack VanDerhei, EBRI research director. “The likelihood that a respondent is either somewhat or very confident that they will have enough money to live comfortably throughout their retirement years is 22 percentage points higher for those who have a plan than their counterparts without a retirement plan.”

• Planning is more than just saving or knowing how much savings you need. A solid retirement plan covers:
  • When to start Social Security
  • When you’ll stop working
  • Will you have a retirement job
  • How much can you spend
  • Will you tap home equity
  • How will you turn assets into retirement income
  • How should you be invested
  • And so much more.

The good news is that there are many different ways to retire securely. Use the Boldin Retirement Planner to discover your path to a secure future.

3. Have a Plan AND a Backup Plan

Retirement confidence has risen at least partly due to around 10 years of economic expansion. The economy and financial markets have grown over this time period. However, indicators suggest that things might be changing. Interest rates may go up. Inflation might rise. The stock market may fall. Your health may deteriorate. No one knows what will happen. For these reasons, it is a good idea to have a plan AND a backup plan.

• The Boldin Retirement Planner allows you to create best case and worst-case scenarios — so you know if you are prepared for anything and everything that might happen.

4. Take care of debt

Another factor that is affecting workers who are planning for retirement is debt. Debt can be detrimental to your retirement and your overall confidence. The ERBI study found that in 2016, only 9 percent of workers who describe their debt as a major problem say they are very confident about having enough money to live comfortably throughout retirement, compared with 32 percent of workers who indicate debt is not a problem.

• Try to eradicate all debt before thinking about retiring.

5. Can you afford your retirement lifestyle?

Transamerica reports that retirees are using their free time to spend more time with family and friends, pursue hobbies and travel. Even with the extra income needed for those activities, 72 percent of retirees say they are “somewhat” or “very” confident that they will be able to maintain a comfortable lifestyle during retirement.

• The good news is that spending ebbs and flows throughout the different stages of retirement. Learn more about the phases of retirement and how spending changes.

6. Overcome fears

Among those surveyed by Transamerica, 44 percent report that their greatest retirement fears are declining health that requires long-term care and a reduction in or elimination of Social Security. Outliving their savings and investments follows at 41 percent, states the survey. “Today’s retirees are facing formidable challenges in ensuring that they have adequate income to last their lifetimes. As Baby Boomers retire, Social Security and other benefit programs will likely be under even greater strain,” says Collinson.

• The best retirement plan can help you assess your fears and create ways to tackle them. Explore the 3 Greatest Retirement Fears and What to Do About Them…

7. Funding long retirements

Transamerica found that retirees expect to live in retirement for an average of 28 years and 41 percent expect to live in retirement for more than 40 years. This is most likely due to the good health of retirees because 70 percent of those surveyed believe that they are in good or excellent health. Living a long healthy life is ideal, but funding a long retirement is where your planning may get a little tricky. Almost half of all retirees surveyed reported that the most important financial priority is just getting by and/or covering basic living expenses. This could be due to the fact that more than half of all retirees said they have a retirement strategy, but only 10 percent have it in writing.

• You have a better chance of thriving and not just getting by if you have a plan.

Find Out How Confident You Should Be About Your Plan

“As a society, we frequently speak of the need for workers to save and prepare for retirement. Unfortunately, the conversation often ends once people stop working and retire, which is when it becomes even more critical for them to have a financial plan that can last their lifetimes,” says Collinson. Many of the issues surrounding retirement can be prevented with a little planning. Use the Boldin Retirement Planner to figure out retirement strategies and avoid unnecessary stress. Best of all, the tool will help you determine whether your confidence (or lack thereof) is warranted. Once you have entered enough information, the system will tell you:

• Do you have enough savings
• What “gotchas” could foil your financial security
• Can you focus on building wealth

The Boldin Retirement Planner is a powerful and easy to use tool and was recently named a best retirement calculator by the by the American Association of Individual Investors (AAII). Ultimately, having a plan leads to more retirement confidence and overall preparedness and it’s never too late to start planning. Navigating the planning landscape can be a balancing act, but as data shows, having a plan helps retirees position themselves for the best outcomes and for feelin groovy!