Building retirement confidence

Do you lack confidence in your retirement goals? You’re not alone. According to a North American survey, 41% of participants gave themselves a ‘C’ or lower on retirement planning. Thankfully, there are ways to boost retirement confidence and create greater financial security for the future.

What are common retirement concerns?

Many factors can contribute to a lack of retirement confidence. In research, we found a strong percentage of respondents felt that barriers — like not making enough money or making early financial mistakes — impeded them from saving enough for retirement.¹ Another issue, especially amongst younger generations, was the belief that they won’t be able to rely on Social Security when they retire.

How do you know if you’re retirement ready?

A retirement timeline can vary from person to person and is based on various factors, including financial goals and preparedness, health considerations, and lifestyle preferences. If you have any questions about retirement readiness, it can be helpful to seek professional guidance to take a holistic look at your financial plan and determine if there are any retirement income gaps and which solutions may be beneficial for creating enough savings for the future.

How to potentially increase retirement confidence

Thankfully, there are some actions that can be taken to help boost confidence when it comes to successfully funding and navigating retirement.

1. Estimate amount of money needed for retirement

In order to be confident in a retirement plan, a good first step is to calculate the amount of money needed. This not only provides a direct goal but also allows greater focus on money-saving efforts. Retirees typically need about 80% of their pre-retirement income to cover the standard living expenses of food, housing, and transportation when they leave the workforce, according to the U.S. Department of Labor.² However, when retirement arrives, other goals will likely require additional funds, like traveling or relocating to a new place. To get the most accurate estimate of retirement income needs to be included in a budget, both planned and unexpected expenses should be considered.

2. Assess your finances

Once the amount of money needed to retire comfortably is calculated, it’s time to review income and savings to determine what you’re spending and how much you need to put away each month to meet this retirement goal. Building a budget around estimated retirement expenses is an effective way to stay on track with savings and give a real-time visual of your progress toward the goal. Plus, it allows you to see retirement savings in action, helping to boost retirement confidence. Start by reviewing bills and bank statements and make a list of what is spent each month. The list should include essential and non-essential expenses. Essential expenses are things like rent or mortgage, groceries, utilities, and credit card and loan payments. Non-essentials are things like TV apps, subscriptions, and memberships. The list of expenses should be as detailed as possible so you can identify places where you might be overspending. Once the list is completed:

Reevaluate financial priorities

It may be necessary to tighten your budget to save more money for retirement. To make this easier, prioritize an expense list and then cut out the non-essential items that appear at the bottom.

Use a budgeting app

Budgeting apps can be useful tools for making money management easier. They allow you to gather all accounts and bills in one place, so you can conveniently manage finances from one dashboard and easily create budgets, set financial goals, and pinpoint areas of overspending.

Track spending

Creating a budget — and sticking to it — is helpful when setting retirement goals. To help stay on the right path, it's a good idea to track spending regularly to know how income is spent and which non-essential costs can be reduced.

3. Pay down debt

Many of us have credit card bills, mortgage on a house, or even outstanding college loans. Making adjustments to expenses is a good way to strengthen your finances while planning for retirement. To get on track and confidently stay there, consider transferring balances to a low-interest credit card to consolidate debt. Expenses like a mortgage, rent, vehicles, and groceries can all be reassessed to reduce your spending. Non-essential expenses like dining out and cable may also be cut or reduced.

4. Consider adding guarantees into a financial portfolio

Adding a fixed index annuity (FIA) can be a valuable product to add to a retirement portfolio which offers protection from market downturns. An FIA earns interest based on changes. Plus, an FIA can generate steady growth for retirement. Having a diversified retirement portfolio can a long way toward building financial confidence and peace of mind for the future.

5. Create an emergency fund

Having an emergency fund is a good way to shore up confidence in a retirement plan. The goal should be to have enough available funds to get you and your family through possible unemployment, injury, or other unforeseen events without tapping into retirement savings. Experts suggest building an emergency fund equal to six months of living expenses.

6. Talk to a financial professional

Retirement planning can be an involved process. If you don’t feel confident in your plan and want to ensure you’re on the right track, visiting a financial professional can help offer expert guidance on which solutions can strike the right balance between growth potential and protection. With a comprehensive financial plan in place, you can improve retirement readiness and feel more confident about having the assets needed to live your dreams for the future.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.

1. Factors in retirement confidence, North American, January 2023

2. Celebrate your financial independence, U.S. Department of Labor, as of July 2024

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