After working hard in a successful career, every person comes to the end of the road: retirement. When that happens, you don’t want to be left without a strong plan for managing the wealth you have worked so hard to accumulate.
At Falcon Wealth Planning, founder Gabriel Shahin works with individuals every day to help them prepare for a successful retirement. Today, he shares some of the best ways that you can strategically plan your financial future.
Pay Down Debts
One of the first and most important steps in retirement planning is managing any existing debt. This is critical while you are still earning your income – even if it means not maximizing your retirement contributions for a short period of time.
Although many people see paying debt and investing in retirement as separate actions, they are more closely related than you may think. By paying down high-interest loans and credit cards, you can more effectively budget for your retirement years, make important investments, and have the cash reserves necessary for emergencies.
Paying down your debt means investing in yourself – and that is the most important investment you can make.
Invest for the Future
Once you have addressed any remaining debt issues, Shahin says it’s time to maximize financial growth. This can be done in a variety of ways, including traditional IRA, Roth IRA, 401(k), and brokerage accounts. For long-term financial planning, Shahin recommends a tax-free Roth IRA, which provides tax advantages.
However, if you have already maxed out your retirement accounts, investing in a brokerage account can have short-term benefits. The key is to maintain a diversified investment portfolio to minimize risk.
Plan a Retirement Budget
Although your retirement may be years away, it is important that you begin forecasting expenses after you stop working. You can use your current monthly budget as guidance for the future, but you should also plan for possible changes in the coming years.
As you get closer to retirement, there may be changes in terms of your living situation – particularly if you move from your home into a retirement community. Beyond budgeting living expenses, you should look for areas where you can cut unnecessary expenditures to create a leaner budget, leaving more of your finances available for cash reserves or investment opportunities.
Establish Retirement Goals
According to recent statistics, the average length of retirement in America is 18 years. With nearly two decades of post-work life to enjoy, Shahin says it’s time to think about how you want to spend your retirement years.
For some people, retirement is the time for traveling around the globe. For others, they want to spend leisure time engaging in their favorite sports or activities. Other retirees find volunteer opportunities or start a small business of their own.
Whatever your retirement dreams, achieving financial freedom is the best way to ensure that you can accomplish even your loftiest vision. Setting meaningful, measurable retirement goals is a great way to focus your financial planning as well. Whether you want to plan a dream travel experience or start a local small business, your retirement goals will be a driving force for your financial planning.
Create a Lasting Legacy
For most people, building personal wealth is about more than simply accumulating more money and assets. It’s about having the freedom to do what you want with your life. And as people approach retirement age, they begin thinking more about the impact they want to have even after they are gone.
By designing your legacy plan now, you give yourself the time and decision-making power to positively impact the lives of others. Part of your legacy plan will be determining where your wealth goes after your death – to family members, friends, community organizations, or charities.
And there are tax-advantaged ways that you can make charitable giving part of your retirement, Shahin explains. By setting up a donor advised fund, charitable lead trust, charitable remainder trust, or pooled income fund, you can ensure that your wealth is directed toward the people and agencies you care about most.
Whether you are planning to retire in 5, 10, or 20 years, setting up your plan well in advance allows you to stay in control of your personal wealth. If you have questions about smart retirement planning or wish to speak with a wealth management expert, visit Falcon Wealth Management today.
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