10 Retirement Planning Tips: The Struggle Is Real

Retirement goals. Everyone has them. Everyone needs them. But, are they simply dreams that may never come to fruition or built on a solid foundation of careful planning and years of committed saving? That, friends, is the both the question and the answer, and we won’t make you read between the lines to figure it out: goals are easy to define and may be born in a wish or a dream; reaching those goals—turning your dreams into reality—requires a plan. Because, in order to reach your goals you have to have a plan, and these retirement planning tips will help.

You may know where you want to retire (goals!), but how are you going to get there (plan)? Sounds easy enough, doesn’t it? Get to it! Set your goals and craft a plan!

But, wait…

As many already know, saving for retirement is not that simple for the average American. Even the best-laid plans can often come to a screeching halt, depending on your situation and station in your life and workplace. Plans require commitment. However, commitment is not just a firm state of mind, but it requires the means (think money) to fulfill in terms of reaching those retirement goals. Which is why planning and commitment must have a certain fluidity that adapts to your ability to execute both, especially in today’s ever-changing economic times.

Retirement planning challenges

Here’s Scary Fact #1: American seniors were recently informed that for the year 2016, their Social Security would enjoy no cost of living raise. To add insult to injury, many of these same people may very well face increased medical costs. Why? According to this article published by the Wall Street Journal:

“Most Americans have their outpatient care premiums for Medicare Part B deducted directly from their Social Security checks, and the annual cost-of-living increase usually covers any increase to premiums. When it doesn’t, a longstanding “hold harmless” law protects about 70 percent of seniors from having their Social Security payments reduced.

But that leaves about 30 percent of Americans on Medicare to cover a hike to premiums that otherwise would be spread across everyone. That group includes people new to Medicare, federal retirees who don’t receive Social Security payments and about 3.1 million people with higher incomes, that is, those making more than $85,000.”

Scary Fact #2: Many Americans are unable to participate in retirement plans because their employers do not provide them. Others cannot participate because they are not eligible for employer-sponsored plans. Again, let us quote another article recently published by the Wall Street Journal:

“Why are only about half of American workers saving for retirement through their workplace? According to the Government Accountability Office, it’s largely because their employers do not offer savings plans like a 401(k).

Of all the workers who aren’t currently saving through their employer, 68% work for an employer that doesn’t offer a plan and 16% are not eligible to participate in their workplace program. Only 16% could take part but choose not to, a GAO report released today found.

The report takes a step toward understanding why workplace retirement saving among American workers isn’t more widespread. It suggests that more people would take part in retirement plans if more plans were offered. That could help more people be better prepared for retirement and avoid relying on government programs.”

Scary Fact #3: Americans are living longer. We saved this little nugget for last because living longer shouldn’t be a bad thing (right?). However, in terms of saving enough money to live on at retirement—it means a lot. Plainly put, the longer you live, the more money you’ll need to take care of yourself in your golden years. But, without widespread workplace retirement plans, facing limited Social Security benefits, and understanding the plight of Americans whose income is already sparse—how is saving for retirement even possible?

These are real problems in the real world where goals and plans live in conflicted co-existence in the stark reality of the economy today. Even though there are reports of a boost in economic growth due to an increase in wages and new jobs—along with reports that Americans are spending less and saving more—retirement planning often takes a back seat to the cost of current necessities.

Goals are one thing, but plans are another and retirement planning can seem like a pipe dream that some cannot achieve. However, that is a defeatist attitude—one that we at Advanta IRA cannot accept—and neither should you. So, now that we’ve presented you the bad news, let us share the good news in the form of a few tips that can help you begin to transform your retirement goals into a potentially successful, solid plan of action.

Retirement Planning Tips

  1. Know how much income you will need to retire. Use this calculator to determine the number, which will help you devise a plan.
  2. Talk to a professional. A trusted CPA or CFP can review your finances and help you create a plan.
  3. Save, save, save. Every little bit helps. Whether you decide not to eat out as much or forego a few date nights every month, each dollar you save can propel you that much closer to adequate retirement funds.
  4. Contribute to your employer sponsored retirement plan. If your employer offers a plan, take advantage of it. Depending on the plan, you can contribute pre-tax dollars from your income and often employers provide an additional contribution on your behalf. If your employer does not currently offer retirement benefits, ask them to consider doing so. It never hurts to ask, even if the answer may be “no.” But, if the answer is “yes” you’ll be on your way to a brighter retirement future.
  5. Establish an individual retirement plan. There are several plans to choose from such as traditional and Roth IRAs, and individual 401(k) accounts. If you are self-employed, consider a simple employee pension plan (SEP IRA) or a savings incentive match plan for employees (SIMPLE IRA). Any of these accounts are better than none and can help you realize your retirement goals.
  6. Consider self-directed retirement plans. Every retirement account above can be self-directed, which means that YOU control your retirement funds and investing decisions. Many self-directed account owners understand that investing in what they know best can potentially boost their account earnings at a faster pace than more traditional investing methods may.
  7. Explore investment options. Traditional assets like stocks, bonds, and mutual funds are often a mainstay in retirement plans. But, alternative assets such as real estate, private lending investments, oil and gas options, and much more, are also permissible in self-directed plans—which can open the door to greater earning potential.
  8. Invest, invest, invest. This may seem impossible at first, but should be considered. When you acquire enough funds in your individual retirement account, explore different opportunities that can potentially boost the income in your plan.
  9. Max out your plan’s yearly contribution limits. Every plan has a set amount that you can contribute each year. Try to reach these limits if you can. Use this chart for guidance but understand these amounts may change every year so remember to consult a professional or the IRS for clarification.
  10. Know the value of compound interest. If young adults begin investing in their teens, by retirement age, they could be millionaires thanks to compound interest. Compound interest plays out exactly like it sounds—and is what one can consider free money (oh, yes) that is acquired by interest that is earned and added to the principal deposit amount, which continues to gain interest over and over again, for the life of the retirement account.

So, yes, the struggle is real. And you may have to dig deep, change certain aspects of your current life, and claw your way to success inch by inch. But, these retirement planning tips can help you begin saving right now for retirement will help you in the end. Make it a priority. Define your goals. Make a plan and stick to it as much as you can. Your future self will thank you, we promise.

If you have questions about this article or would like to learn more about self-directed retirement plan, please contact us.

About Jack Callahan

Jack proudly earned his bachelor’s degree in finance and multinational business from Florida State University and his law degree from the University of Florida College of Law. He established Advanta IRA in 2003 and has steadily nurtured and grown the company and the team every year since. Prior to founding Advanta IRA, Jack delivered specialized counsel to real estate investors, small business owners, and real estate professionals on tax, legal and financial matters. As an industry expert, Jack is a frequent speaker on self-directed retirement plans. He is an accredited continuing education instructor for the Florida and Georgia Bar Associations, Florida and Georgia Real Estate Commissions, and The American Institute of Certified Public Accountants.