How to plan ahead to reach your retirement goals
The pandemic has created a number of financial obstacles for Americans to overcome. Local financial professional Barry Bigelow from Great Waters Financial joined Tara Terregino on Good Morning Northland to talk about tips to help you reach your retirement goals.
Bigelow says whether you’re saving for a home, car, college, a trip or retirement, figure out what matters to you. Then separate your goals into different time frames: one year, five years and longer. Once your goals are set, saving money will feel more intentional and will inspire you to keep moving forward. A financial plan gives you an opportunity to review your goals, update them and keep track of your progress.
Next, Bigelow says to keep track of your finances. A solid financial plan includes getting a concrete picture of your monthly cash flow. Start by writing down your income, fixed expenses and other expenditures you may have. The goal is to give every dollar a job. This doesn’t mean spend every dollar. He says, we want you to see how you’re spending your money so you can start spending it more effectively. Tracking your money is something you need to do regularly and will help you avoid any financial surprises that come your way.
Next tip he mentions is to plan your taxes. Many of us only think of our taxes in April. But tax planning is an essential part of any financial plan and should be done year-round. The choices you make can impact how much you pay in taxes both now and in retirement. Bigelow says you can reduce your taxable income for the year by contributing to a 401(k) or traditional IRA. The money you put into these accounts also grows tax-deferred until you withdraw it in retirement. Bigelow says besides the tax benefits you receive now, maxing out your contributions is an important part of increasing your retirement security.
Then Bigelow highlighted how you can strategize your long-term investments. A long-term investment strategy is part of any comprehensive financial plan. There is a broad range of investments available, including stocks, bonds, cash and real estate. One of the most popular ways you can invest is through a workplace retirement plan, like a 401(k). He recommends his clients save 10-15% of their salary in their retirement accounts. Set up automatic increases to your contributions either annually or with each raise.
Lastly, Bigelow says when you are 5 to 10 years away from retiring, you should look for a financial professional who can put together a full financial plan to help give you the confidence to retire.