Retirement Planning Changes Over Time

By Jeffrey Meenes, CFP® (Published Date July 14, 2022)

There was a time when you would have had a nice pension at the end of you working years. Now, of course, pensions are not very common. Instead, there is a huge variety of retirement strategies and approaches one can take today. Though its important to analyze your own retirement strategy and plan, not all retirement strategy approaches are going to be the same. 

Across the country, people are saving for that "someday" called retirement. Someday, their careers will end. Someday, they may live off their savings or investments, plus Social Security. They know this, but many of them do not know when, or how, it will happen. What is missing is a plan – and a good strategy might make a great difference.  

A retirement strategy directly addresses the "when," "why," and "how" of retiring. It can even address the "where." It breaks the whole process of getting ready for retirement into actionable steps.

This is very important. Too many people retire with doubts, unsure if they have enough retirement money, and uncertain of what their tomorrows will look like. In contrast, you can save, invest, and act on your vision of retirement now to chart a path toward your goals and the future you want to create for yourself.

Some people dismiss having a long-range retirement strategy since no one can predict the future. Indeed, there are things about the future you cannot control: how the stock market will perform, how the economy might do, and so on. That said, you have partial or full control over other things: the way you save and invest, your spending and borrowing, 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 aligns to your risk profile (and capacity). It examines tax implications and potential tax advantages. It takes possible health care costs into consideration and even the transfer of assets to heirs. 

A prudent retirement strategy also entertains different consequences.

Financial advisors often use multiple-probability simulations to try to assess the degree of financial risk to a retirement strategy in case of an unexpected outcome. These simulations can help to inform the advisor 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.

Let a retirement plan guide you.

Ask a financial professional to collaborate with you to create a retirement strategy and financial plan, personalized for your goals and dreams. When you have this plan, you will know what steps to take in pursuit of the future you want.