There is probably not a single working person on the planet who isn’t counting down the days to their retirement. Unfortunately, not everyone takes the steps needed to prepare for it.
When the time comes for you to leave the monotony of your 9-5 existence you’re going to need more than Social Security to get by. You’re going to start planning much sooner than later if you’re going to want to be able to replace 100% of your income; most people don’t fully appreciate how hard a goal that actually is. This is where retirement planning comes in.
Windus Fernandez, Trilogy Financial Services vice president of investments, said the sooner a person begins working with a financial planner the better suited they’ll be to reach their long term financial goals.
“People should really begin their financial plan as soon as they get their first job,” she said. “Those are the people who are not only going to have enough to retire off of comfortably, they’re actually more likely to be able retire early.”
The best way to start off, she said, is to allocate about 10% of your income toward retirement planning.
“Some put away more, others less. It really depends on how financially free you want to be or what your vision of comfortable looks like,” Fernandez said. “Some people decide to save less and to dedicate more of their income into paying off their mortgage. In this case they may not have as much money saved for retirement but they won’t need as much as someone who still needs to pay off their house.”
During your first meeting with a financial planner you should be prepared to discuss your wants, your goals and your starting point.
“I’ll ask how old they were when they started saving and if they have anything saved. I’ll want to know who their tax person is, whether they have a living trust and what their hobbies are,” Fernandez said. “There are a lot of different parts to a financial plan and knowing what those are can make a big difference when it comes to helping someone manage their assets.”
If someone wants to travel more now and less when they retire, this is something that should be addressed. Or, on the other hand, if you prefer to buy your cars in cash, this is helpful to bring up as well. This will allow your financial planner to better come up with a customized financial plan that matches your desired lifestyle and long term goals.
“It’s so different for everyone,” she said. “The first step is knowing what a person’s situation is.”
If you have yet to start planning for your retirement, don’t worry. Although it is always better to start off earlier in life, it is never too late to embark on that path.
“If you have 30 years to retire I might recommend you take a heavy stock equity position. If your five years away I might recommend allocating some to stocks but to invest the rest more heavily in bonds.”
The most important thing, though, is taking that first step.
“The biggest mistake people make is waiting too long to start. So many people tell themselves they’ll begin planning in six months, or next year, and that keeps getting pushed back,” Fernandez said. “It’s better to start when you’re young because the longer the time you have to save, the easier it will be to reach your retirement goals.”
(If you have questions about financial planning, how to get started or to make an appointment, call Windus at Trilogy Financial Services at 858-755-6696, ext. 3169 or visit her website.)