Plan for Tomorrow | Building retirement confidence
An elder couple look over their retirement documents in their kitchen

Building retirement confidence

Sep 26, 2023, 2:34:04 PM | Reading Time: 5 minutes

Do you lack confidence in your retirement goals? You aren’t alone. 41% of participants in the recent North American survey gave themselves a ‘C’ or lower on retirement planning.

What are common retirement concerns?

Many factors can contribute to a lack of retirement confidence. In our 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. Another issue, especially amongst younger generations, was the belief that they won’t be able to rely on Social Security when they retire.

How to increase your retirement confidence.

Thankfully, there are some actions you can take to help boost your confidence when it comes to successfully funding and navigating your retirement.

1. Calculate how much money you need for retirement

In order to be confident in your retirement plan, you should first calculate the exact amount of money you’ll need. Loosely estimating the amount won’t cut it. You don’t want to over-estimate or come up short when determining the funds you’ll need. Accuracy is key.

Calculating the precise amount for your retirement not only gives you a direct goal, it allows you to focus your money-saving efforts and investments. 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. But when you retire you’ll likely have other goals that require additional money, like traveling or moving to a new place. Whatever you envision for your life after you leave the workforce should be factored into your estimate. When you’ve mapped out what you want to do in your retirement, research costs associated with those goals and activities to ensure your plan accounts for them.

2. Assess your finances

Once you know how much you need to retire comfortably, you must review your income and savings to determine what you’re spending and how much you’ll need to put away each month to meet your retirement goal. The best way to do this is to build a budget around your estimated retirement expenses. Not only will a budget help you to stay on track with your savings, it will give you a real-time visual of how you’re progressing toward your goal. What better way to boost your confidence than seeing your retirement savings in action? 

Start by examining your bank statements and bills, and make a list of what you spend each month. Your 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. Your list of expenses should be as detailed as possible so you can identify places where you might be overspending. Once you’ve made your list:

Reevaluate your priorities – You may need to consider tightening your budget to save more money for your retirement. To make this easier, prioritize your expense list then cut out the non-essential items that appear at the bottom. Cutting expenses can be difficult, so you’ll have to decide what is more important to you as you work toward retirement. 

Track your spending – Your budget is a tool that can help you set your retirement goals, but to maintain confidence, you’ll need to commit to that budget. To help yourself stay on the right path, it's a good idea to get in the habit of tracking your spending on a regular basis, so you know where your money is going and you can figure out where you may be overspending. 

Use a budgeting app – Budgeting apps can help you better manage your money. Apps allow you to gather all of your accounts and bills in one place so you can conveniently manage your finances from one dashboard and easily create budgets.

3. Pay down debt

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

4. Consider adding guarantees into your portfolio

Adding a fixed index annuity (FIA) to your retirement portfolio can help protect your nest egg from market volatility and generate steady lifetime income. An FIA allows you to contribute a money to a fund that grows tax deferred with an option to receive guaranteed payments throughout your retirement that is not invested directly in the stock market. It may not earn interest as high as a stock market account could, but you also are guaranteed not to lose money due to market losses, which goes a long way to building confidence in your investment.

5. Create an emergency fund

Having an emergency fund is a good way to shore up confidence in your retirement plan. Your goal should be to have enough available funds to get you and your family through possible unemployment, injury or other unforeseen events that may happen in your life. This will protect the money you have saved for retirement. Experts suggest building an emergency fund equal to 6 months of living expenses. 

6. Talk to a financial professional

Retirement can be an involved process. If you don’t feel confident in your plan visit a local financial professional who can help you to achieve your long-term financial goals. Not sure where to start your search? Check out our find an agent page.