You’ve gone past the big 5-oh, and now your retirement planning has reached crunch time. The result of a lifetime of money habits will soon make itself abundantly clear. If you set a retirement savings target but have been neglecting it, you need to dust it off for a careful review. “You should be looking at your plan periodically, at least every three years,” says Dick Bellmer, past president of the National Association of Personal Financial Advisors.
Once you’ve reacquainted yourself with the financial destination you want to reach, take these steps in your remaining pre-retirement years to make sure you get there.
1. Set realistic goals
First item for consideration: Your savings and investments thus far. Hopefully, you’ve been stashing funds away consistently, making maximum contributions to things like 401(k) plans and IRAs, as well as other accounts.
How much is enough? That depends on your lifestyle and expenses, potential medical bills and the kind of support you’ll have from, say, a pension plan and Social Security. But, as you review your savings goals, be careful not to set the bar too low. According to Fidelity Investments, investing professionals recommend that you reach retirement with savings of at least 10 times your last full year’s worth of income from work. But nearly three-quarters of Americans underestimate that need, a Fidelity survey found.
“People typically don’t downsize,” says Harold Evensky, CFP professional in Coral Gables, Florida. “It’s not uncommon for them to spend more in retirement than less.”