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Financial Retirement Goals

Reach Your Financial Goals by Retirement

Achieving your financial goals before you reach retirement can greatly impact your savings. Most importantly, you can reduce the chance of having to withdraw from your retirement account. Here are some goals you can set to help you become financially stable by the time you retire.

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7 Financial Goals to Protect Your 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 an extra cushion of protection you can grow throughout your lifetime. The greater the emergency fund, the less likely you'll need to access your retirement savings to cover unexpected costs.   

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

2. Create and stick to a monthly budget 

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

50% of your monthly income should be spent to cover essential bills (i.e., rent, groceries, utilities, etc.). The next 30% covers optional spending like shopping or dinning out. Your remaining 20% is for savings or investments.  

Create and compare monthly budgets to continue monitoring 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 be prepared with an established spending plan.  

Get started with the Budgeting to Fund Your Goals Worksheet from Principal®. 

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

3. Attack your debts

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

How to attack your debts:  

  1. Decide which debt to pay now versus later. Focus on loans with the highest interest rates (like credit cards).
     
  2. Prioritize debts in your monthly plan. Budget for additional savings and apply them to one of your loans.
     
  3. Revaluate your needs. Does your loan support an asset or build wealth? If not, it is essential to keep it

4. Design personal investment strategies 

The sooner you start investing, the longer your investments can grow. There are many options to choose from, but it’s essential to choose investments that are right for you. Your investment plans may include:    

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

5. Planning 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 with your family. You and others can talk over the goals for the inheritance and how money will be managed. This can save your loved ones from making financial decisions in difficult moments later on.      

6. Continuously evaluate your goals   

The retirement lifestyle you’re dreaming of now, may not be the same when you’re ready to retire. As your life progresses, continue to reflect on your goals, work towards them and set new ones. 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 align with your life’s goals.  

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