Will You Be Able to Retire With Your Lifestyle Intact?

No matter what tools we use to calculate the numbers, we financial advisors always come to a plain and simple truth: Some clients are well-positioned for retirement and others are not. Which are you? What advice do you need?

Our firm’s clients, as well as those of most wealth advisors, likely experienced some financial success in life. Maybe one client earned a high income in the prime of his or her working years. Maybe another client made a wise investment or started a successful business long ago. Due to this success, few of our clients face a grim retirement; most will be able to afford the essential food and shelter, along with a few comforts, without worry.

How many can maintain the lifestyle of their working years is a different matter entirely. One lifestyle while working doesn’t automatically lead to the same lifestyle in retirement.

According to a recent Country Financial retirement Financial Security Index, one in four Americans across all age groups save nothing at all for retirement. Slightly more than half (55 percent) either don’t participate in a workplace-sponsored retirement plan such as a 401(k) or don’t even know if they are in a plan.

This may come as a surprise if you find yourself in this situation, especially if you maximized annual contributions to a 401(k) plan or an individual retirement account. Saving to these vehicles certainly makes a good start but constitutes only part of your overall retirement equation.

Your need to diligently save above and beyond these vehicles, in a taxable investment account. These additional savings boost your chances of keeping your desired lifestyle in later years.

Why do some people fall short when saving to taxable investment accounts? Because such saving requires that you limit your current consumption. You must deliberately look at the dollars in each paycheck and make a conscious decision to not spend them all.

In short, you need faith – and incredible resolve – that with time and appropriate financial guidance these assets will be there in the future.

Think about financial advisors to help you maintain this discipline, both in the management of your portfolio and your financial decision-making. Our firm’s approach, to name one, places renewed emphasis on your family budget, regardless of your income or asset level. (Most clients come to us without such a budget.)

We dive into details – requesting bank and year-end credit card statements – and quantify as much as we can. We discuss your family’s highest priorities and identify areas where you potentially spend too much.

As a result, we also cover your capacity for additional savings. We then automate your savings via monthly electronic transfers from your checking accounts.

Next, we monitor annually to gauge your progress and go over spending and savings goals you set in the prior year. If you accomplished these goals, we celebrate together. If you haven’t, we coach you through the changes and decisions you must make going forward.

These conversations aren’t always easy for you or your advisor. Sometimes, your advisor has to deliver a message that you need to hear: Saving more during your working years provides greater flexibility and security in your retirement and the best opportunity to continue the life you want.

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Written by Courtney M. Weber, CPA, CFP, and a wealth advisor at Truepoint Wealth Counsel in Cincinnati.

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