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Protect Your Retirement Savings With These 7 Simple Steps

Setting financial goals is the first step to planning ahead for retirement. Follow these steps and you could make a huge impact to your savings at any age.

Reach Your Financial Goals By Retirement  

1) Build an emergency fund

How much money should you save in case of an emergency? Experts say you’ll need to save at least 3 to 6 months’ worth of necessary expenses. ¹ This serves as a cushion of protection you can grow throughout your lifetime. The greater your emergency fund, the less likely you'll need to access your retirement savings account to cover unexpected costs.       

¹Source: How much money should I save each year for retirement? Fidelity. (2021, Jan 06).

2) Stick to a monthly budget 

Do you track your monthly expenses? If not, it’s important to start so you can learn how to budget for future retirement costs. A popular budget guideline is the 50/30/20 rule. ² 

50% Essential bills (i.e., rent, groceries, etc.)
30% Optional spending like shopping or dinning out
20% Savings or investments  

Create and compare monthly budgets to monitor your spending habits. Set goals to spend less, save more, and make necessary adjustments as you go. When it's time to retire, you’ll already be familiar with a spending plan.   

²Source: All Your Worth: The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Warren Tyagi

3) Attack your debt

Debts can cause major roadblocks when planning for retirement. Paying off debt allows you to focus on other financial goals and saves money on interest payments. Consider this:

  • Prioritize paying off loans/debts with high interest rates first
  • Budget additional savings to go towards extra debt payments
  • Revaluate your needs to eliminate nonessential debt when possible

4) Design personal investment strategies 

The sooner you start investing, the longer your investments can grow. Although there are many options to choose from, your investment plans may include:   

  • Employer Sponsored Programs: Your employer may offer a 401(k) program you can make contributions to. They may also include an added employer match up to a certain percentage.
     
  • Market Investments: Stocks, bonds and money markets are a few examples of these investments. Each has their own rules, risks, and rewards you may want to explore.
     
  • Personal Growth: Personal investments like going back to school for a degree or purchasing property can lead to earning a higher income or building wealth over time.

5) Plan ahead for loss of life

It's best to be prepared for life's inevitable moments. Be proactive about taking care of legal documents like a will or living will. This allows you to make decisions on estate management, beneficiaries, and medical treatment in advance. 

If you are anticipating an inheritance, or plan to leave one, it’s best to discuss this together with your family. You can discuss your goals for the inheritance and how money will be managed saving your loved ones from making financial decisions in difficult times.      

6) Continuously evaluate your goals   

The retirement lifestyle you’re dreaming of now, may not be the same years later when you're ready to retire. As your life progresses, continue to reflect on your goals and adjust them if necessary. If your current goals support your ideal retirement, the more likely you are to achieve it.

7) Update your life insurance policies

As you evaluate your goals, you may notice your insurance needs have changed. It’s important to recognize your risks at all stages of life, not only when planning for retirement. Contact your agent to discuss your insurance policies to ensure they are aligned with your life’s goals. 

Date Posted: August 15, 2021

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