Warning Signs That You're Not Prepared for Retirement
BY: Daniel M. Savage
- You’re not regularly reviewing your retirement accounts. Although it is not beneficial to be obsessively watchful, quarterly or semi-annual reviews are advisable. Reviews need not be deep, but they should include an appraisal of your risk tolerance, economic and market conditions, your investment lineup, and whether your retirement balance growth is reasonably on track. They should also be done at the household level.
- You’re not on track to eliminate debt prior to retirement. Positive cash flow is essential for financial peace of mind, especially during retirement. Debt, particularly credit card and installment debt, is the archenemy of positive cash flow, so plan for its elimination … and track your progress.
- You plan to draw Social Security benefits at age 62. As attractive as that may seem, that election will cost you many tens of thousands of dollars during retirement. Remember: Benefits at age 62, 66, or 67 are not your maximum. They increase by 8% every year you delay up to age 70.
- You have not formalized a retirement plan with the help of a qualified advisor. A sound retirement plan requires much more than countless growth projections driven by multiple assumptions. It should include a careful analysis of your future lifestyle preferences, anticipated expenses during retirement, potential needs of various family members, retirement income management, health care and its funding, as well as contingency plans, to name a few.
- You are not working with a fiduciary. A fiduciary is ethically obligated to put the client’s best interests above all else. Working with a seasoned advisor is one of the best ways to ensure that you have a sound retirement that will stand the test of time. So be sure that advisor is a fiduciary!