Our life expectancy is steadily increasing. But living longer is even better when your savings let you lead the lifestyle you want during all those extra years!
As a financial planner, Angela Lermieri knows your biggest concerns as you approach retirement. Here, she shares her advice to help you ease them.
1. Review your financial commitments
Despite your best intentions, you may end up with debt as you approach retirement. There are solutions to help you overcome the insecurity that such a situation could create.
To give you more flexibility, you should start by reviewing all your financial commitments, while setting a goal to pay off your debts before retirement or as quickly as possible.
You may also benefit from consolidating your amounts owing into a single payment, using the value of your home to borrow at lower rates, or accelerating repayment of your debts at the highest interest rate.
And if you can’t eliminate all your debts before leaving the workforce, don’t forget to include them in your retirement budget. This will allow you to assume these financial responsibilities without impacting your projects.
2. Diversify your portfolio and continue to invest in retirement
No one can predict with certainty stock market movements and the long-term performance of one’s investments. That’s just the way it is! However, you might be able to respond more calmly to market fluctuations and sleep better by diversifying your portfolio, while ensuring you stay within your investor profile and risk tolerance.
When inflation is on the rise, it’s a sign that prices are going up and that life is more expensive. Indexed retirement income could help you cope and maintain your purchasing power in the event of a price spike. For example, government annuities are adjusted accordingly. The same would be true of some employer pension fund annuities, although others wouldn’t be enhanced.
Pensions that aren’t indexed to inflation would have a negative impact on your future income. In this case, your advisor can help you assess your situation while implementing or reviewing your retirement plan, and also give you recommendations based on your needs. He could suggest, for example, to annually increase your savings rate or to diversify your portfolio based on your investor profile, focusing on a long-term growth of your investments at a higher rate than inflation.
3. Build up an emergency fund
Separation, accident, injury—these are all unexpected events that could impact your retirement savings. Of course, situations like this are unpredictable, but you can limit their impact by building up an emergency fund. And this one should be used only in an emergency!
5. Plan your disbursement strategy
In financial terms, as soon as you retire, you run the risk of longevity. Even if this statement seems strange, it’s very real! Indeed, statistics reveal that we generally live a few years longer than previous generations. Therefore, you need to keep your savings going as long as possible by planning your disbursement strategy.
With the help of your advisor, you’ll be able to use higher life expectancy assumptions to prevent your capital from running out in your lifetime and to make it last as long as possible.
5. Have adequate health coverage
Like many other future retirees, you may be wondering whether your health will allow you to live out your retirement as you imagine. No one knows the answer to that question! However, by taking preventive measures to maintain your health, you’ll likely increase your chances of staying away from your doctor and hospitals once you retire.
And to dispel more of your worries about illness, review your insurance coverage. The coverage you have now could also help you once you retire and prevent you from dipping into your savings if something goes wrong. This will give you peace of mind, which will be very good for your physical and mental health!
Planning for your retirement will ensure your peace of mind. If you need help finding solutions that work for you and you wish to review your retirement plan, don’t hesitate to contact your advisor.