How to Pursue Your Dream Retirement

Some journeys are more important than others. Managing your journey towards retirement is one of these. That’s because everybody wants the rewards that their long years of hard work merit, and the dream life they hope their efforts will bring.

But depending on where you are on your personal journey, the idea of reaching the place where you’re able to live prosperously without a regular paycheck can be daunting.  By ‘prosperously’ we mean being healthy in body and mind, financially secure, and looking forward to tomorrow with confidence.

While many people try and achieve financial success by going it alone, having a certified retirement financial advisor at your side will make your journey to retirement a lot easier, and funding it a lot more certain.

And you’ll have someone to help shoulder the load.

The 3 Predictors of Financial Success

At WestStar we deal with people in every life stage, and have come to appreciate that whereas some people take to retirement planning like ducks to water, others struggle to get their feet wet. Sometimes all it takes is a bit of encouragement to get them to take the plunge, and in our experience, they always thank us once they start to see the benefits.

Along with many important things in life, financial success is a matter of commitment, discipline, and well-informed decisions. Without these three ‘success predictors’, success itself may be left to chance.

‘Retirement should be a journey to find purpose, and not be bogged down by financial stress and pressure. Many people fear losing the identity and security that their careers give them. I help my clients identify the things that keep them awake at night. I invite them to transfer their financial stress onto my shoulders and have one less burden to contend with.’

Mark Serafini, Financial Consultant.

Let’s talk about your journey to retirement, and we’ll detail why you need retirement planning (if you don’t yet have it), what your options are, and useful tips on remaining dedicated and disciplined.

What is Retirement Planning?

Retirement Planning is not something you begin thinking about shortly before retirement. Retirement planning is about how you look at your future today, and what you do to make certain that the dreams you have are built into a plan that targets them.

At WestStar we’ve seen many people wait until they’re a few years from retirement before seeking our retirement advisory services, only to discover that they’re underfunded for retirement.

The best possible time to get financial planning advice and guidance is when you’re as many years away from retirement as possible. This will allow you to find the most appropriate investment, risk, and tax strategies for your long-term success, while meeting your short-term needs along the way.

From a money perspective, retirement planning is about ensuring you have enough money invested to deliver the lifestyle you dream of, irrespective of what the markets are doing. This in turn requires a diversified investment portfolio that generates reliable income over your retirement years.

‘I help individuals plan for retirement by building a strategy that allows them to aim at retiring 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 CRPC®, Financial Consultant

Your retirement advisor can help you calculate the rate of return you’ll need on your investments to fund the lifestyle you envisage; how much risk you’d be wise to take, and how much income you’ll need from the various investment ‘pots’ that you fill over your working years.

From a risk perspective, it’s about safeguarding you from what life throws at you, and providing access to capital to cover any contingencies along the way.

The Role of Retirement Planning in Your Life

There will come a time when your career reaches its end and that time will hopefully be on your terms. However, the loss of your job, disability, or ill-health may force you into a retirement that you may be emotionally and financially unprepared for. Even if you have no desire to ever stop working, should you find yourself suddenly unable to work in the future, it makes sense to prepare financially for retirement.

Remember, the things we accept as simple requirements of life – like medical emergencies, inflation, and supporting your family – are challenges that remain our entire lives. One of the roles of retirement planning is to bring assurance that should an unforeseen event threaten to derail your journey and put an end to your working career, there is a contingency plan to meet these challenges

Whatever the reason, a contingency plan is the assurance of continued independence when you’re unable to generate an income. Holistic retirement planning will provide for such contingencies.

Retirement planning shouldn’t be a daunting task, or one to procrastinate: rather, it must be uppermost in your mind, and all that you undertake in your working life should be done with your retirement dream in clear focus.

How then do you begin? Let’s break it down into actions.

Start Small

Many people share the common misperception that professional financial advice is only for the wealthy. As a result, retirement financial advisors are often mistakenly viewed as wealth guardians rather than professionals who guide us towards our financial goals and help protect us from life’s storms.

Your retirement advisor will tell you that if you’re starting out in your career, the trick is to commit to saving and investing – to start small – and do so as early in your working life as you can. You don’t need to be on your way to wealth before beginning your financial planning journey. And that’s what it is; your journey, on your own path, committing as much as you can afford to future use and making it a deliberate and disciplined action.

Providing you keep it affordable and make it regular, this path will lead you to your milestones. By doing so, it’ll work for you over the years to come, and expand your options as you grow in your career and wealth.

Investing over a long period may provide you with the option to retire early, change careers, travel abroad, or follow your philanthropic pursuits. Without a financial plan your choices are likely to be limited, and your financial future uncertain.

Click here to find out more about the importance of sound financial planning in securing your dream retirement.

Understand your Investment Options

On top of the foundations of budgeting and saving, investments are an essential way in which to put retirement planning into action. By starting to build secure investment pillars today, you’ll dramatically increase your odds of seeing real growth and success over the years ahead. They’re not just a way to save, but also to reduce taxes and grow your wealth.

Most retirement plans offer a tax advantage, either during the savings phase or when you take withdrawals. For example, while your traditional 401(k) plan contributions are made with pre-tax dollars, Roth 401(k) plans are funded with after-tax dollars, but your withdrawals are tax-free.

401(k) or 403(b) retirement savings plans often include matching contributions from your employer, and if you were automatically enrolled in your company’s 401(k) or 403(b) plan, your financial advisor will suggest you make sure you’re taking full advantage of your company match if it is available.

You’ll have heard it said that you should aim to save at least 15 percent of your annual income to maintain your current lifestyle in retirement. Many retirement plans start you off at a default savings deferral rate of 3 percent, which will not deliver nearly enough to provide retirement security – this means you should consider increasing your annual contribution.

If you’re self-employed, you can also invest in a Roth IRA, or traditional IRA, and have a few extra options that aren’t available to everyone, including the SIMPLE IRA, SEP IRA, and Solo 401(k).

First-time investing may be a murky concept, but your advisor will be able to make everything clear and guide you in understanding the pros and cons of each investment option. This is essential because investors are faced with a bewildering array of choices, whether for stocks or bonds, domestic or international, across different sectors and industries.

One way of making a flying start on your investing journey is to consider exchange-traded funds and mutual funds as investment options – both minimize risk and will let you invest an amount according to your budget, without too much of an administrative burden.

Mutual funds and exchange-traded funds (ETFs) provide you the opportunity to participate in pooled fund investing. These pooled funds bundle a large basket (also referred to as a ‘lot’) of securities together to offer you the benefit of a diversified portfolio. The pooled fund concept offers real economies of scale since it allows fund managers to decrease transaction costs through these ‘large lot’ share transactions with pooled investment capital.

The Exchange-Traded Fund (ETF)

An exchange-traded fund or ETF can contain all types of investments, including stocks, commodities, or bonds.  An ETF is traded on an exchange just like stocks, and as the shares are bought and sold on the market, the price of an ETF’s shares will change throughout the trading day. ETFs appeal to investors because they track market indexes, and typically offer lower expense ratios plus fewer broker commissions than buying the stocks individually would. Even as a small sum investor, you get access to the growth of a large fund and the buying power that a large number of investors delivers.

Mutual Funds

Mutual funds work similarly to ETFs, but are not traded on an exchange. Mutual funds trade only once per day after the market closes. Whereas ETFs are passively managed, mutual funds can be monitored daily by your fund manager, with decisions made dynamically to invest toward higher returns, as they happen.

Mutual funds appeal to investors because they offer a wide selection of actively managed funds. Since mutual funds are actively managed, management fees will be higher than for ETFs, because managers have a more complex task in identifying the best securities to fit the portfolio’s strategy.

Accumulation is Still Key – How to Boost Your Savings and Invest for Retirement

As much as we all agree on the benefits of investing in your long-term future today, let’s close off with that universally tried and tested money accumulation technique – the simple matter of saving.

And like we said, if you want to turn your retirement dreams into reality, the best way to start, is to simply start. After all, success is a matter of commitment, discipline, and astute decisions.

So if you’re new in your working life, take advantage of employer retirement plans – like the 401(k), or the 403(b). At this stage of your career, it’s about committing enough over the months and years into a regular (preferably automatic) investment plan for your retirement. Start now and stick to it – the adage of ‘slow and steady’ rings particularly true here if you’re just starting out.

If you’re further down the track in your working life, it’s about continued and committed accumulation and diversification, and that’s how you build wisely. Look at recalibrating your targets as you near retirement. This may be through specific earning goals or the acquiring of assets. Both will see you accumulate wealth, and aim to reach a place where you can afford to live off of the wealth you’ve built.

Saving and investing to accumulate wealth are predictors of success that we all need to keep in mind; because when retirement arrives, our prosperity will be the result of these actions over the years of our working lives. In this way, everything we’ve put in – all our choices and the sacrifices we’ve made – will start paying out.

At WestStar Prosperity Partners we expect that your retirement planning strategy will be as personal to you as your goals and dreams are, and that these will determine how you spend your golden years. We help people heading to and through retirement navigate the complexities that come with turning their life’s work into a sturdy platform for retirement.

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 talk 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: “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. A Roth retirement account offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth account must be in place for at least five tax years, and the distribution must take place after age 59½, or due to death or disability. Depending on state law, Roth accounts distributions may be subject to state taxes.”

“Mutual Funds and Exchange-Traded Funds are sold only by prospectus. Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained directly from the company or from your financial professional. The prospectus should be read carefully before investing or sending money.”

“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.”

“A diversified portfolio does not assure a profit or protect against loss in a declining market.”