Refreshing Your Financial Plan for Retirement
Jan 3, 2020 | 5 min. read
Saving for retirement takes discipline and planning. Stay on track with annual checkups.
Theodore Roosevelt once said, “Old age is like everything else. To make a success of it, you’ve got to start young.” The same could be said about saving for retirement, since most of us will need to spend decades methodically saving money to fund our nonworking years.
While it’s conventional wisdom to start early so you can build wealth over time, your retirement plan is not something you create and then set aside until your hair turns gray. In the same way you need periodic wellness appointments with your doctor, it’s important to review your retirement savings goals and make sure you are progressing every year. Use these guidelines to periodically refresh your retirement plan.
- Consider how your goals have changed.
When you’re in your twenties, it’s pretty difficult to imagine how you might want to live in your seventies, and you might not be thinking about financial planning for retirement. Your idea of retirement will most likely evolve as you age and your circumstances change. Ask yourself: What do I want retirement to look like? Will I want to continue working and, if so, in what capacity? Do I want to travel or live off the grid? There are no wrong answers, but how you respond can certainly affect how much you’ll need to save.
2. Examine the life changes you’ve undergone since your last financial assessment.
Have you gotten married or divorced? Are you planning to have a child? Are you PCSing overseas or transitioning from the military to a civilian career? Take stock of how your life has changed and what that means for your finances today and down the road.
3. Assess changes in compensation and expenses.
When you get a raise, it’s normal to reward yourself with a celebratory splurge. And it’s easy to passively absorb the increase in salary as a cost-of-living adjustment. But this is a prime opportunity to boost your family’s financial health and take a positive step towards achieving your dream retirement. Following the 50/50 formula is a great way to go: Allocate half of your increase to your financial goals and pursue lifestyle upgrades with the other half.
Make sure you take into account one-time windfalls such as a bonus or tax refund. Additionally, you may need to adjust your budget for increases in medical costs or household expenses such as property taxes.
4. Look beyond savings.
A comprehensive retirement plan includes more than just cash. If you have a family or are planning on having a family in the future, you’ll want to make sure they have enough to live on if something happens to you. While members of the military are eligible for $500,000 in term life insurance under Servicemembers’ Group Life Insurance (SGLI), you lose that coverage when you retire or separate from the service. You can replace it with Veteran’s Group Life Insurance (VGLI), but the premiums are more expensive and they increase every five years. Buying a personal policy gives you more control — and allows you to lock in a low rate when you’re young and premiums are more reasonable. Read more about the pros and cons of SGLI here.
Experts agree you should also review your estate plan annually. If you think estate planning is only for the uber-wealthy, think again. At the minimum, you’ll want to ensure your will, guardianship selections and beneficiary designations are up-to-date.
5. Let us do the heavy lifting.
A licensed professional can and should walk you through all these steps and help you with financial planning for retirement. At First Command, our Financial Advisors understand that every financial plan needs adjustments as circumstances change.
We offer complimentary financial planning for active duty military, and we pride ourselves on our commitment to service members, veterans and their families. Contact a Financial Advisor today to refresh your retirement plan or get started.
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