As Retirement Needs Change, So Should Your Plan

With more than 10,000 "Baby Boomers" reaching retirement age each day, there is more focus on whether they are financially prepared to retire.   

Unfortunately, many are now realizing that they may have to work longer or retire with lower expectations because they didn’t develop a sound retirement strategy when they were younger, according to Jack Riashi, Jr., a certified financial planner with in Farmington Hills.

“In the past, having a pension and Social Security was enough to retire on, but today, increasing living costs and people’s expectations of a grander lifestyle during retirement, has changed the way people need to save and plan for retirement,” Riashi said.

Riashi said to meet retirement goals and to prevent mistakes in retirement planning, people should consider the following:

• Max Out 401(k) savings each year
• Live within your means before retirement
• Be realistic about retirement goals
• Don’t ignore rising inflation, medical costs
• Don’t rely solely on one source of income for retirement
• Protect retirement savings/don’t be greedy
• Ensure you don’t outlive your retirement savings
• Find a financial professional who understands retirement planning and your situation completely

Riashi said that for many years, people were told that 75 percent of their pre-retirement income would be sufficient for their retirement years, but the rising cost of health care and increasing cost of living expenses, coupled with the crash in the housing and stock markets has left many people with less assets to tap into during retirement.

“Realistically, people should plan on achieving 100 percent of their pre-retirement income during retirement if they want to live out their retirement years in comfort,” Riashi said. “That may or may not be realistic for some people, but if they fall short, they might be better able to handle a lower income amount. In addition, people are living much longer than in the past, so their money needs to last longer during retirement than past generations.”  

"Today, with discussions about the viability of Social Security, which I believe are somewhat premature, people have to take more aggressive action to ensure they will enjoy their retirement," Riashi said.  

While studies have shown that many people need to increase the amount they save to reach their retirement goals, it doesn’t mean that everyone needs to have a $1 million or more to retire comfortably. This is where working with a financial professional is critical. A professional can help you figure out if you are on track to meet your goals using a variety of methods. 

“To often people overstate the amount of money they need, and then they panic and make bad investment decisions,” he said. “Not everyone plans to travel the world or keep up two homes during retirement. If you are the type that leads a simple lifestyle today, you can probably continue that lifestyle in retirement even if you don’t have $1 million or more saved. Ultimately, your retirement success is dependent on your lifestyle choices, now and during retirement."