desk notepad with retirement plan written on it next to calculator
  • Posted October 14, 2022

What Many People Forget When Planning for Retirement

If you’re like most people, you’re looking forward to enjoying your retirement with a comfortable income. Most likely, you’ve been saving regularly, perhaps through your employer’s 401k plan or an IRA. But when planning for retirement, many people forget about some important factors. Learn more from one of our top certified financial planners in West Hartford, CT.

Investment Risk

When you have only a few years left until you retire, you may need to adjust your investment risk. As the timeline shortens, you’ll have less tolerance for wide swings in the market. It isn’t necessary to move everything out of high-yield stock, but it’s a good idea to transfer at least some of your assets to lower-risk products. 

Your financial advisor may recommend low-risk investments such as U.S. Treasury bonds, municipal bonds, and annuities. Be sure to factor in inflation; you don’t want to be earning less than the average annual inflation rate. Inflation decreases the value of cash and lowers your spending power.

High Healthcare Costs

While you might be perfectly healthy right now, you never know what challenges you will face in the future. Even with insurance, high healthcare costs can quickly drain your savings. At age 65, you will probably sign up for Medicare but bear in mind that it doesn’t pay 100% of your expenses.

A Medicare supplement plan will help reduce costs and provide a cap for out-of-pocket expenses. To protect your assets, you might also consider a long-term disability plan. It will pay for nursing care if you become seriously ill. Hospice care is usually covered by Medicare. Our certified financial planners can provide you with insurance planning services to determine your coverage.

Cost of Hobbies

Many people dream of retirement so they can indulge in hobbies they never had time for when they were working. Maybe you’re hoping to play golf every day or take up painting. Or, you’re hoping to cruise around the world. Pursuits like these are going to make money.

When budgeting for retirement, anticipate the amount you will need per month and add it in. If you’re wanting to make a big expenditure, say for a boat or a vacation home, start planning for it now. You won’t want to be saddled with debt in your golden years.

Being retired can be a rich and fulfilling time of life, but to have the retirement you’ve always imagined, you will need to be financially secure. That takes planning and foresight. While arranging your finances for the future, don’t forget to get the big picture.

Did you enjoy this article? Here’s more to read: How to Fill in the Gaps of Your Retirement Plan

Contact Tenpath Financial Group for certified financial planning services.