Secrets for a Dream Retirement

February 22, 2013

The basic key to a good retirement is to save money and earn a decent payback on your investments.  However, there are other keys to working this plan, and they involve all stages of life from the early years  into your retirement.  Earning money and investing it wisely is not the only thing to consider.  According to an article from CNN Money, there are 6 important secrets to having your dream retirement.

  • Investments – 16.6% is the magic number.  According to the article, the key to a safe retirement is to save 16.6% of your income.  If you can set aside this amount for approximately a 30 year time frame, you will probably not outlive your retirement savings.  If you get a later start on saving, you need to increase this number to 20-25% in order to meet this same goal.  The more you save, the less you will have to worry about the future and a good retirement should not just be a dream.  If you are closer to retirement, you need to look at things a little differently.  You may need to dial down the risk and make different types of investments.
  • Health – good health cuts both ways.  The longer you live, the larger your nest egg needs to be.   Research has shown that people who are healthy tend to retire with three times the assets of the less healthy, and they also spend down their wealth more slowly.  You should know your numbers such as blood pressure, cholesterol, etc.   Exercise is important as well.  You want to stay healthy so you can enjoy your retirement and all that money that you have saved!
  • Career – success at age 50 means a whole new skill set.  You can’t finance a 30-year retirement with a 40-year career.  The truth is, most careers don’t make it until 65 making  early retirement almost a given.  You need people around that help you do your best.  Surround yourself with individuals that emulate the things  you want in your life.  Employers like to see thatyou are still learning.  Continuing your education is always a good idea.  You need to be careful not to get into a comfort zone and forget to make note of your accomplishments.  This list of skills will come in handy if you need to update your resume or promote yourself.
  • Family – know when to say “no” to the kids.  Do have adult children that just won’t leave the nest or parents who need to move back in with you?   What things are you doing that are helpful, and what are you doing that is just enabling them?  50% of middle aged individuals give financial support to their adult children.   Take action and draw lines upfront.  Set clear expectations for what is expected for the adult child.  Helping with advancing their career is one thing…tickets to a concert is something different.  What about your parents?  First, get a clear view of their finances.  Check out Eldercare.gov for information about services, such as adult daycare, that are available for elderly parents.  Don’t forget about tax breaks that allow you to claim adult relatives you help as dependents.
  • Midlife changes – recalibrate your goals.  Sometime you have to create a new vision for your retirement.   Sometimes creating your new vision includes a divorce or death.   Divorce or death of a spouse can completely change your goals for retirement.  Household income drops and assets are split.   Don’t make 401k and pension plans an afterthought when you split up the assets.  The first impulse may be to keep the family home, but it may be a better idea to sell the home and divide the equity.   It’s important to know what is available to you as far as your partners’ pension plan.   A target-date fund is a good idea for investing this money.  The investing starts out aggressive and becomes more conservative as time goes on.   When facing a spouse’s early death, be sure to give yourself a cooling off period.  You should wait 6-12 months before you make any important financial decisions.
  • Debt – burn the credit card…not the mortgage.  We don’t consider someone fully retired until they are debt-free.  This includes your mortgage as well as all credit cards.   Paying off pricey debt is the only good reason to save less money.  When borrowing money for college, you should not borrow more for college than their projected first year’s salary.  Our take on mortgage debt…be a hyper-saver and use whatever you have extra to pay off the mortgage early.

Thanks, as always, for all your comments and show ideas.

Most Recent Episodes

Financial Hacks and Habits of the Top 1% (By Age)

ho wouldn’t want to have a high enough income and net worth to be considered part of the top 1%? In this episode, we’ll tell you exactly how much you need to be considered part of the top 1% - and the habits and hacks those in the top 1% used to get there.   In this...

How to Win With Money in 2023!

Financial resolutions are always near the top of the list of Americans’ most popular New Year’s resolutions. Whether you want to save and invest more, pay off debt, or have other financial goals, we will give you the tools you need to win with money in 2023.   In this...

TikToks That INFURIATE Financial Advisors

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

5 Levels of Wealth AND How to Achieve Them! (2023 Edition)

We believe there are five distinct levels of wealth, but they aren’t solely dependent on income or net worth. We’ll walk you through each of the five levels - including how to know where you are at, how to advance to the next level, and signs you are doing it right.  ...

Average Net Worth By Age in 2023!

It’s time for one of our most anticipated shows of the year: our annual Net Worth By Age show! In this year’s edition, we’ll shared updated numbers and data for 2023 and discuss the most important things for you to focus on in each decade.   In this episode, you'll...

Win Financially During a Recession! (Everything You Need to Know)

The bear market we've experienced in 2022 has been longer than many in recent memory - and some are concerned that the economy may soon enter into a recession. Here's everything you need to know to stay on-track and win financially during a recession!   In this...

The Fed Just BROKE the Car Market! (What You Need to Know)

Car prices have been on a rollercoaster ride the last few years, and it looks like they might finally be coming down. In this episode, we’ll discuss what you need to know about the current car market, pitfalls of buying a car, and how to do it the right way.   In this...

Top 4 Money Mistakes People Make During the Holidays!

There’s a reason why financial resolutions are always near the top of the list in January - many Americans spend the holiday season making financial mistakes. In this episode, we’ll discuss the top money mistakes people make during the holidays and how to avoid them....

Financial Advisors Share What They WISH They Knew About Money Earlier!

Have you ever felt like if you just knew this one thing about money earlier your finances would be in a better spot? In this episode, we’ll share the five biggest things we wish we knew about money earlier!   In this episode, you'll learn: What we wish we knew earlier...