For generations past, retirement has been anticipated as a time of relaxation, spending time with loved ones or even getting the chance to explore the world. However, with life spans increasing, the cost of living on the rise and shifting attitudes toward work, retirement as we know it has been redefined.
If the thought of retiring comfortably, or at all, seems unattainable, you’re not alone. The most recent Merrill Edge Report found that a majority of Los Angeles-area workers expect that they will need to work through their retirement in order to live the lives they desire. Some Angelenos even reported believing they’ll need to take on a side job to reach their retirement goals.
While working as a Merrill Edge Financial Solutions Advisor at Bank of America, I’ve helped customers manage their money and plan for life’s big changes, including the financial uncertainties that come later in life. If I chose one piece of wisdom to share with those planning retirement, it would be to have a plan, start early and be flexible. Below are several other factors to take into consideration when setting goals for retirement and deciding when will be the right time to enter this next stage of life.
The Magic Number – Can You Afford to Retire?
How can you determine exactly how much money you’ll need to live comfortably during retirement? The hard truth is, you can’t. However, you can plan generously and learn to be open-minded with your spending.
Finding a target number for retirement savings is a point of confusion for many, and varies by individual and family. According to the Merrill Edge Report, 87 percent of LA-area retirees said they did not have a number in mind before they retired. For those planning today, 45 percent don’t anticipate needing more than $1 million. Everyone’s needs are unique, and because the financial climate is more uncertain than ever, many financial advisors have completed longevity training to understand the needs of our senior and elderly Merrill Lynch customers.
Here’s where the flexibility comes in, because even the best-laid retirement plans go awry. Your goals will likely change to reflect a shifting career, new personal desires or life events – each of which may require a more robust retirement fund. These are common reasons would-be retirees continue working, but this also occurs by choice. More and more we are seeing older adults enter a new line of work, often one that they enjoy even more than their previous career. Working in retirement presents an opportunity to turn personal interests into a source of income.
Your Legacy – More Than Money
At the end of the day, we understand that you’re not only planning your own future when considering retirement, but that of your loved ones as well.
When I think ahead to my own retirement plans, I know I’ll be thinking about how I can take care of my wife Janelle and daughter Rhylee. That doesn’t just mean providing financial support, but ensuring I have the freedom to spend quality time with them, and also that my wellbeing does not become a burden that hampers their quality of life.
The best way to alleviate these burdens and ensure that your legacy is in the right hands is to create and maintain legal documents outlining your wishes. There are also ways to share your legacy throughout your retirement – using gift tax inclusions or helping to pay for a younger relative’s education are great ways to ensure maximum impact of your money.
For many aging adults, a legacy comes with increased vulnerability. According to the National Council on Aging, one in thirteen older persons will be abused or financially exploited. I take pride in being able to help my customers recognize scams or fraud, and help them navigate the situation should it occur. Whether fighting fraud or laying out a legal plan for your financial assets, taking steps to safeguard your legacy will ensure it benefits the important people in your life.
There’s no one “right” way to retire. Even if a traditional retirement seems like a far-off dream, there are many steps you can take to ensure your financial and personal priorities are protected whether you continue to work or not. It’s never too early to start planning. The sooner you start, the more prepared you’ll be for any curveballs life throws your way. The best part is, you’ll never have to figure it out alone.
Terrill A. Smith is a Merrill Edge Financial Solutions Advisor for Bank of America based in Long Beach. To learn more about how Terrill or one of his colleagues can help you plan for the future, contact him at (562) 308-3938 to schedule an appointment.