How to retire confidently

When it comes to retirement finances, many Americans don’t feel confident about their plans. 41% of participants in the recent Midland National survey gave themselves a ‘C’ or lower on retirement planning. Fortunately, you can boost your confidence by taking a few simple steps to ensure you are on the right path to financial security in your golden years. 

What are some retirement concerns people have?

With so much uncertainty happening around the world recently, it’s probably no surprise to hear that many are concerned about their retirement plan. According to our research, a large portion of people (particularly millennials) stated that they were concerned about outliving their retirement savings. It makes sense, considering that humans are living longer. Another big concern among survey respondents? A growing belief that Social Security won’t be available once they retire.

Ways to boost retirement confidence

You can’t predict the future, but you can prepare. To help boost your confidence, it’s a good idea to start planning. Here are a few things to try.

1. Calculate how much money you need for retirement

Calculating the precise needed for your retirement not only gives you a direct goal, it allows you to focus your money-saving efforts and investments with confidence. 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 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. Evaluate your finances

Knowing how much you need to retire comfortably is only half the battle. You’ll also need to review your income and savings thoroughly 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, but it will also 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:

Assess 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 regularly, so you know where your money is going and you can figure out where you may be overspending. 

Try a budgeting app – Budgeting apps will 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.

For more on how to budget, check out the Midland National blog, how to make a monthly budget.

3. Reduce your debt

To get on track financially and confidently stay there, you should try and eliminate your debt. Most of us have credit card bills or a mortgage on a house that we need to take into account when planning for retirement. Making adjustments to your expenses is a really good way to strengthen your finances and reduce what you owe to lenders. 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 the cable may also be cut or reduced.

4. Create an emergency fund

Shore up confidence in your retirement plan by starting an emergency fund. This will protect the money you have saved for retirement if something unexpected happens. 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. Experts suggest building an emergency fund equal to 6 months of living expenses. 

5. Consider guaranteeing a portion of your retirement savings with a fixed index annuity

fixed index annuity allows you to contribute 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. Adding an FIA to your retirement portfolio can help protect your nest egg from market volatility and generate steady lifetime income. It may not earn interest as high as a stock market fund 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.

6. Talk to a financial professional

If you don’t feel confident in your retirement plan, visit a local financial professional who can help you to achieve your long-term financial goals. You can get help finding one by submitting your information on our find an agent page.

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REV 3/2021