PLANNING FOR TOMORROW

Financially preparing for retirement

We all want to be ready for retirement, to wake up and enjoy more of the moments that matter most. But dragging financial struggles into this new chapter can put a damper on your hard-earned reward. Devising a solid plan now can help you enter retirement worry-free. 

The big questions
“Will I have enough savings?” “Can I maintain my lifestyle?” 

Those are some of the most frequent internet searches regarding retirement. Financial advisors across the Roanoke Valley say being able to answer “yes” with confidence comes down to organizing your assets and developing a strategy to reach your goals. 

“People’s worries stem from where they are in life,” says Patrick Ayers, President and CEO of Ayers Financial Services. “If they’re still working, they want to know when they can retire and what quality of life they can afford post-retirement. For those who have stopped working, they’re concerned about running out of money and not being able to fulfill their dreams.” 

Andy Ingram, President and Owner of Capital Investment Company of Virginia, says while you’ll find many links during a search about how much to invest, for how long and with formulas for retiring at different ages, they don’t take into account other personal factors along the way — like health issues, travel pursuits, charitable giving and the many unexpected, expensive disasters life can throw at us. 

“There is no cookie-cutter approach. There are articles out there that support draw down rates of X percentage of X, and those are largely based on a savings figure; that number’s different for everyone,” Ingram says. “It’s more [about taking into account] the full gamut inside of their household. Each client has different goals and objectives for themselves, their families and their businesses.” 

Ayers says a proper plan considers your current situation plus “the things that you hope won’t happen but may.” 

Rules for the road
While financial planners are hesitant to give blanket advice on specific products to a diverse clientele, there are some time-tested rules everyone can follow, including creating good habits early. Start saving in your 20s and be consistent with your contributions — a matching employer contribution can double your savings. 

Ingram says, “I tell them to be consistent and diligent … and figure out what can they afford within their budget right now. Younger folks are still establishing credit, trying to get a home, so it’s more about [investing] what fits within your budget that’s not going to impact your lifestyle dramatically.” 

When you get a cost of living or merit raise, live off the previous income and contribute the difference to your 401(k). Ayers says the key to investing for retirement is to stay rooted in “rational not reactive” decisions. 

“While it’s easy to get emotional when it involves your hard-earned money, it isn’t wise to do so. It is the very nature of the market that things will rise and fall over time, but these fluctuations can be the cause of significant gains — or mistakes — depending upon your reactivity and response.” 

Ayers grew up in a family tax business and says incorporating tax planning into your strategy is beneficial: “I often see people who have been saving for years but failed to implement tax-saving strategies.” 

Other factors to consider are legacy giving (what you want to leave behind for children and grandchildren) and providing for your spouse if something happens to you. 

A trusted advisor
Planning for the ups and downs is why Ingram prefers to strike the very term “retirement” from retirement planning. “Lifestyle Planning & Investment Management,” he calls it, and it’s something most people can’t do on their own because often our emotions get in the way. 

The internet may provide a lot of information fast, but personalized guidance is invaluable. 

“Financial advisors bring specialized knowledge and coordinate with other professionals, such as estate lawyers and accountants, to provide comprehensive solutions,” Ingram says. “That coordination ensures that all aspects of that client’s financial life are working together seamlessly … You don’t want to sacrifice life to save for retirement, because life is important and you want to enjoy it. So we talk about what you want to achieve in two years, in five years, 10, 20 and 30, further down the road. [We ask], ‘What do you feel like your lifestyle should be?’ Then you build those objectives into a comprehensive plan to determine if they’re viable goals.” 

A study from Herbers & Company, a business management consultancy, shows that people can reduce stress and anxiety by working with a financial professional, and they are three times happier than those who manage their own money. 

“I cannot tell you the number of times someone has told me that knowing someone else is actively managing their retirement funds provides an invaluable peacefulness,” Ayers says. 

Research from Vanguard also suggests that using an advisor can net you 3 percent or more in returns. 

While traditional one-on-one advising is still important for establishing trust, many financial planners are using technology to create detailed plans and communicate with clients. Apps and software can help you see your plan in real time, as spending happens and investments build. If you’re ready to reach out to a financial advisor, research their certifications in the field and years of experience as a fiduciary, a signal that they have taken an oath to do the right thing for their clients, acting in their best interests. 

Whether your career and family are just getting started or you’re approaching retirement, advisors can guide you in implementing financial strategies that will produce favorable results. ✦