Don’t Let These 6 Assumptions Destroy Your Retirement Dreams

Most Americans work really hard while they dream of the day they can finally retire. But preparing for retirement requires much more than a dream ─ it requires a plan.  At WestStar Prosperity Partners we’ve seen many people wait until they’re nearing retirement before coming to us for personalized retirement advice. We’ve discovered that many are under-funded for the retirement they dream of.

Retirement Planning – When should I start saving for retirement?

With so much professional and affordable retirement advice readily available, we’ve asked ourselves why more people don’t embark on financial planning sooner. After all, the earlier in life you begin, the longer you have to build the foundations you’ll need to fund the retirement you dream of.

You do not want to wait until you’re about to retire before seeking retirement advice.

There are many benefits to working with a financial advisor, yet only 35% of Americans do so, according to the Northwestern Mutual 2022 Planning & Progress Study. The latest statistics show that only 32% of US households prepare a monthly budget plan. A picture emerges of the large majority of Americans leaving their financial future to chance.

We’ve all heard the age-old saying: ‘Failing to plan means planning to fail.’ For this reason, just as most people would never embark on an important lifelong journey without a plan, it’s unusual to start something as important as saving for retirement without seeking advice and instruction beforehand. And if you’re among the 65% of people who don’t have an advisor, today may be the best time to get one.

What prevents people from seeking retirement financial advice?

The common factor that prevents us from getting advice in any situation is our pride, and the same is true for our finances. Nobody wants to be in a poor financial situation, but it happens to more people than you would imagine. When they first come to us, many clients find it difficult to admit the situations they are in, both to themselves and to us.

Perhaps you’re somebody with more questions than answers right now, and that’s perfectly normal. Uncertainty about tomorrow is a great reason to begin planning today.

Some of the big questions that I help my clients with include: ‘Am I saving enough to achieve my goals and successfully fund my retirement? How should I save for my children’s college without sacrificing my retirement savings? How can I best protect my retirement savings as I approach the end of my career?’

Jason Hewett, Financial Consultant.

We find that most often the way we see ourselves shapes the way we think, whether in the context of our lives, our situations, responsibilities and goals. The way we think includes our assumptions, and these can have a huge impact on our future – even to the point of derailing the hopes and dreams we have for a carefree and well-funded retirement.

These are the 6 dangerous assumptions we encounter most often:

  •   I can do my retirement financial plan on my own
  •   I don’t have enough money to invest in a retirement plan
  •   I’m too busy to think about my retirement plan
  •   I can’t afford financial advice for retirement
  •   It’s too early to start saving for retirement
  •   I don’t plan to retire

Let’s unpack each assumption and learn why challenging our thinking matters to our future.

I can do my retirement financial plan on my own

The financial services industry has grown exponentially in size and scale over the past two decades, making it a complex field to master alone. This complexity has given rise to the number of professional financial advisors who can help in any situation.

However, over and above helping you navigate thousands of products and investment options, a financial advisor also plays a vital role in helping you maintain composure when investment markets are in turmoil, and preventing you from making emotional financial decisions.

Building your confidence and assuring you that you’ll no longer be alone in your decision-making are significant benefits.

‘Today I help individuals within 10 years of retirement to build a strategy that allows them to retire when they want and not when the market allows. I like to say: ‘Let’s create a strategy so it doesn’t matter if the Dow is 40k or 10k – we’ll have a strategy in place for a variety of market conditions.’

Jarrod Haynes, Financial Consultant

While many people will try and go it alone, a professional financial advisor will help make getting to retirement in good shape a lot easier, and funding your golden years more certain.

I don’t have enough money to invest in a retirement plan

Some people share a common misperception that professional financial advice is only for wealthy people. Yet, retirement financial advisors are professionals who guide us on our financial journeys towards our goals and help protect us from the storms that life may bring.

I’m too busy to think about my retirement plan

Constant neglect of your financial wellbeing can have far-reaching effects on your retirement, which many people grow to regret in time. “I’m too busy” is a regular reason for not seeking financial advice.

Being too busy to sort out your finances serves only to delay what should be a top priority today.

‘My Certified Retirement Planning Counselor™ (CRPC®) designation helps me dive into the specific solutions for retirement planning. Retirement is a singular event that brings my clients much anxiety and for good reason. Some decisions, once made, cannot be reversed. I help clients make the best decisions, directly related to their specific hopes, dreams, and fears.’

Michel Smith, CRPC®, Financial Consultant

I can’t afford financial advice for retirement

Many people think that a financial plan and working with a financial planner will cost them money: but another way of looking at it is that a financial plan can help you identify and prioritize areas where you can save money, reduce expenses, and increase your income. Also, a financial plan can help you develop a strategy for paying down debt and becoming debt-free. This will help you increase your wealth and achieve your goals much faster. And also to sleep easier at night.

“My mission in life is to help people take control of their money and avoid financial stresses. I believe that your financial plan and portfolio should be tailored to make your dreams a reality.”

Sam Gullette CFP®, CLU®, Certified Financial Planner™

There are several different fee models used by financial planning practices and it makes sense to find one that suits your needs. Some fee-based practices charge a flat monthly fee; some charge a percentage of assets under management (AUM), while others charge a combination of both. Many fee-based financial planners charge fees according to a sliding scale which reduces as your AUM increase. Whichever model you choose, remember to negotiate all fees upfront and ensure that there’s full transparency.

It’s too early to start saving for retirement

Interestingly, few of us start investing at the beginning of our careers, and most end up regretting they didn’t.   Regardless of whether you intend to retire at all, starting your investment journey early on in your career will provide you with the gift of many choices.

Investing over a longer period can allow you to retire early, change careers, travel abroad, or follow your philanthropic pursuits. Without a financial plan, you risk limiting your choices and leaving your retirement to chance.

Financial planning advice when you’re many years away from retirement will allow you to find the most appropriate investment, risk, and tax strategies for your long-term success, while taking care of your short-term needs.

I don’t plan to retire

While you may not plan to ever retire, circumstances could leave you with no option. The loss of your job, disability, or ill-health may force you into a retirement that you are emotionally and financially unprepared for. While you have no desire to ever stop working, it makes sense to prepare financially for retirement if you find yourself unable to work in the future.

What can a financial advisor do for you?

If you’re currently not in the best shape financially, you likely have little money saved, lots of debt, and no major assets of value: an advisor could help you improve your financial picture, and change your outlook and your prospects for the better. A financial advisor will help you manage your financial concerns while helping you to define and work toward your goals.

Some of the things a financial advisor can help you with include:

  • Building a strong enough emergency fund to meet your needs and give you confidence.
  • Reducing personal debt.
  • Opening a brokerage account and investing in it.
  • Investing in your IRA.
  • Managing your different financial goals based on their timelines and your priorities (like balancing college savings for your kids with your retirement savings).

Start planning today for a prosperous retirement

Just as we have looked at the 6 assumptions to avoid that can destroy your retirement dreams, so it’s worth looking at the 6 essential steps to take to secure your short and long-term financial security. Read up about them here.

WestStar Prosperity Partners help people who’re heading towards retirement to navigate the complexities that come with turning their life’s work into a sturdy retirement platform. Many of WestStar’s financial advisors have helped their parents and others retire confidently. We’ve done so by creating and executing on a plan to secure dependable income regardless of what the world delivers, and to address issues like health insurance, tax efficiency, and long-term prosperity.

To make sure you’re equipped with the knowledge and advice to pursue your retirement plan with confidence and clarity, don’t hesitate to get in touch.  We’d love to chat with you about your goals and dreams.

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We wish you every success in the future and hope to hear from you soon.

Disclosures: “Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.”

“Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty.”