Financial matters: Five actions to boost your retirement confidence

Rick Gross
Special to the Tribune

Recent research by Ameriprise Financial reveals many contradictions in the way Americans are thinking about and preparing for their retirement. Not surprising is the fact that the vast majority of people nearing retirement want to be happy and healthy during their golden years. Yet many feel uncertain about affording the things they need and want in retirement, though they aren’t necessarily taking the steps to help secure a more confident retirement.

Confidence and preparation go hand-in-hand, and Americans could use a little more of both. The data from the survey showed that those who have taken the following five actions are significantly more likely to say they feel confident about affording the essential expenses in retirement.

1. Create a plan to cover essential expenses with guaranteed income sources. Determining how you will fund your necessary expenses in retirement with guaranteed income sources (such as a CD, Social Security or an annuity) can be challenging, but it can also be very beneficial. You can begin thinking about this, even if you haven’t yet reached your savings goals.

2. Have a written financial plan. Creating and maintaining a document with a plan for how you will fund your short- and long-term goals is important at any stage of your life, but especially as you near retirement. Start by putting your debts, assets, savings and lifestyle goals down on paper and decide how you’ll fund each goal after you’ve left the workforce. Then come up with a savings strategy based on when you plan to retire and how much you’d like to save before then.

3. Factor inflation into retirement planning. The cost of maintaining your lifestyle may increase as the rate of inflation rises over time. The loss of purchasing power is a real risk, but understanding how it may impact your retirement income is crucial so that you can hedge against it. Consider working with a financial professional who can help you calculate possible inflation.

4. Have emergency cash on hand equal to six months of living expenses. This is a key part of a financial plan at any age, but an unexpected event such as a divorce, job loss or disability can be especially devastating to your finances as you near retirement. Keeping at least three months-worth of living expenses in liquid accounts creates a financial cushion that you likely won’t regret having.

5. Calculate how much annual income assets will produce in retirement. This step can be complex, but it can also be helpful in determining how much income you will have to fund your retirement as time goes by. Having an accurate picture of the income your assets may produce can also help you create an annual budget for your retirement.

Preparing for retirement might feel overwhelming, but breaking it down into smaller goals can make it seem less intimidating. If you are nearing retirement and haven’t done several of these things, consider choosing one or two to focus on. The future may always feel a bit uncertain, but proper preparation can lead to increased financial confidence now and during your golden years.

Rick Gross is a Financial Advisor and Private Wealth Advisor with Ameriprise Financial Services Inc. in South Lake Tahoe. To contact him, visit or 530-542-6266.

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