by Zac Majors
4 Red Flags Indicating You Are NOT Ready for Retirement
Preparing for retirement is a rather conscious decision. Studies suggest that around 25% of Americans have no savings for their retirement – and significantly more don’t have a retirement plan in place. This moves to show that you’re not the only one who feels unprepared for retirement.
The good thing about making a sound retirement plan is that it’s never too late. With the help of sound financial advice, you can always develop a plan to take control of your life.
However, before you get there, it’s important to understand what you’re doing wrong. Today, we’ll help you identify some key red flags that show that you are NOT ready for retirement.
So, let’s dive in!
Debt, Debt, Debt
By August 2020, the public debt of Americans stood at $26.7 trillion. Many people in their late 40s and early 50s are still paying off their student debts. If you, too, are in debt – and the debt is a rather large amount compared to your income, you are not ready to retire.
Quality retirement plans are made on retirement savings, not debt. We recommend you get your debt in check before retiring.
Assisting Your Loved Ones
With the current state of our economy, it is no surprise that around 47% of millennials are financially assisted by their parents, while more than 20% of millennials live in their parents’ (baby boomers’) houses. If you’re one such individual supporting your loved ones, you are not ready for retirement.
Try to change the situation first by letting them stand on their own feet. We’re not asking you to kick them out, mind you. You can let them stay in your home, but ask them to manage their expenses or even pay rent. This will free up your income so that you can save for retirement.
To Spend or Not to Spend?
This is a major red flag that we’ve seen arise quite often. People looking to set up a retirement plan usually don't know how much they’ll need for their living expenses and whether or not their current retirement plan will cover it.
We recommend you create a budget for what you plan to do after retiring. For example, if you’re just going to sit at home and spend time with your grandchildren, then you may not have to save as much as someone wanting to travel around the world.
No Investments - No Income
Most Americans live paycheck to paycheck. They’re well off only while they have regular paychecks coming in. And unfortunately, their expenses are almost equal to what they earn. They don’t invest. And if they do, they don’t really have much information about how they work.
If you’re retiring, make sure you have a rather diversified portfolio. Try to make investments that pay off. Remember, investments that don’t pay off don’t make up a retirement plan, but are simply products you own.
We recommend you sit with our financial advisors to help you sort your investments and come up with a retirement plan for you. Even if you don't have any investments but are still looking to retire, our expert advisors can help you find a way to retire happily!