When it comes to retirement, everyone has a different vision. But the path to retirement is generally the same: you work, you save, and hopefully at some point you’ve saved enough that you can stop working and do something else.
How much work before retirement is enough? And how much savings is enough? How long will “retirement” last?
Years ago, retirement meant you stopped working, started collecting a pension, and sailed away to Margarita Ville for the last 10 to 15 years of your life.
But nowadays, retirement could last 30+ years and could include a second career, travel, making new friends, or really, whatever intrigues you. Nearly 70% of workers expect to work for pay in retirement, but only 26% of retirees actually have done so.
So how do you plan for a stage in your life in which virtually anything can happen? With no crystal ball to peer into, it’s not easy.
Want to be sitting pretty during your retirement? Consider “the three-legged stool”, a metaphor for the three most common sources (or “legs”) of income that you’ll likely rely on in retirement:
- Social Security retirement benefits
- Employer pension benefits
- Individual savings and investments
The first two legs of the stool, Social Security benefits and employer pensions, produce a steady or relatively “fixed” stream of annual income throughout retirement. That’s the good news. The bad news? These two legs alone may not support your retirement plans, resulting in an income shortfall.
Unless you can also count on receiving benefits from an employer pension plan—and fewer and fewer of us are able to do so—then the third leg, individual savings and investments, will likely play a major role in funding your retirement.
With so many potential investment options and retirement accounts to choose from—401(k)s, Traditional IRAs, Roth IRAs, stocks, bonds, etc.—it’s important to follow an investment strategy that:
- Is designed to help you achieve your retirement goals
- Balances the potential for growth with your tolerance for risk
- Factors in the potential impact of current-year and future taxes
If you would like to review your unique individual savings and investment strategy, and help ensure a strong third “leg” of retirement income, please reach out to us at your earliest convenience. As an independent boutique financial planning firm, Baron, Silver, Stevens Financial Advisors is focused solely on you, not on corporate agendas. Call our office today to learn more about our alternative approach to retirement planning.
