Creating Your Retirement Strategy
A retirement strategy directly addresses the “when, why, how” and even “where” of retiring. It breaks the whole process of getting ready for retirement into actionable, easily-digestible steps.
This is so important. It is possible to retire confidently, even though you may be uncertain of what your tomorrow looks like right now. Year after year, according to a 2022 study by the Employee Benefit Research Institute, about 47% of workers find themselves retiring earlier than they had expected. You can do this by saving, investing, and acting on your vision of retirement now to chart a path toward your goals and the future you want to create for yourself.1
Focus on what you can control. Since it’s impossible to predict the future, some people dismiss having a long-range retirement strategy. Indeed, there are things about the future you cannot control, like how the stock market will perform or how the economy might do. That said, you have partial or full control over other things: the way you save and invest, your spending and borrowing habits, the length and arc of your career, and your health. You also have the chance to be proactive and to prepare for the future.
A good retirement strategy has many elements. It sets financial objectives. It addresses your retirement income: how much you may need, the sequence of account withdrawals, and the age at which you claim Social Security. It establishes (or refines) an investment approach. It examines financial implications and possible health care costs, as well as the transfer of assets to heirs.
A prudent retirement strategy also entertains different consequences. Financial professionals often use multiple-probability simulations to try and assess the degree of financial risk to a retirement strategy, in case of an unexpected outcome. These simulations can help to inform the financial professional and the retiree or pre-retiree about the “what ifs” that may affect a strategy. They also consider sequence of returns risk, which refers to the uncertainty of the order of returns an investor may receive over an extended period of time.2
Let a retirement strategy guide you. Ask a financial professional to collaborate with you to create one, personalized for your goals and dreams. When you have such a strategy, you know what steps to take in pursuit of the future you want.