You never thought it would happen, but at some point, you might decide it’s time to retire. And when you do, you’ll want to have a strong retirement plan in place.
The big story in financial planning has been and will continue to be affording retirement, which makes sense with the retirement of tens of thousands of baby boomers expected every week for several consecutive years.
For boomers, many of whom have little to no retirement plan in place, affording retirement may be their generation’s last great social cause.
“The concerns over Social Security solvency alone epitomize the fact that your personal wealth, a clear-cut concern for each individual, extends beyond only you,” says Edward Sota, the president and co-founder of Safeguard Financial Services, Inc., and a partner at Safeguard Investment Advisory Group, LLC.
As crucial as it is to afford retirement during one’s golden years, Sota discusses the many ways in which retirement planning extends beyond the individual:
• Long-term care: No one wants to think about struggling with debilitating illness or injury, but experts calculate that 70 percent of people older than 65 will need some form of long-term care at some point. Absence of planning for this potential eventuality is like gambling on a stock that’s at a 70 percent risk of loss. But it’s worse than that, because of the toll infirmity places on immediate and extended family. An inadequate long-term plan for health care can eradicate savings for you and your spouse, as well as most other assets you are planning to leave to your children and grandchildren.
• Grandchildren: Grandparents often prove to be indispensible teachers and caregivers to grandchildren. The saving and spending habits you teach your grandchildren are likely to stick with them their whole lives. Think of it this way: The more financially adept you can make them, Sota says, the more you can spend out of their inheritance without feeling guilty! On a more serious note, grandparents who lead by example with a strong ethic in money may serve as the best examples. And an ability to contribute to a grandchild’s college fund can make grandparents feel more confident in their future well-being.
• Community/charity: While some retirees are trying to turn the tide from a lifetime of poor financial planning habits, others have been meticulously honing their spending habits and expectations for the future. Or, some folks have always been financially blessed. Whatever the circumstances, many retirees want their legacy to be felt beyond the benefit of their family. There are ways to maximize one’s contribution to the community, and the earlier you understand what you’d like to accomplish in this capacity, the better.