Make A Plan NOW for a Comfortable Retirement

The path to financial security and a relaxed retirement begins with making a plan - much like a driving vacation might begin with planning waypoints on a roadmap.  The goal is to accumulate sufficient assets so you can maintain your current lifestyle AND pursue new interests that you may develop in retirement.  Dog sledding in Alaska?  Surfing in California?  Sounds like a ton of fun!
A good place to start is by asking yourself a few questions:

• When do you want to retire?
• What would you like to do in retirement?
• Do you want to downsize, or stay in your current home?
• Would you like to move to a different location based on climate?
• Would you move closer to kids or grandkids?

Your goals play a big role in how aggressively you plan for retirement.
What might a plan look like?
Most people want to save for retirement at a leisurely pace. Here is a time-tested plan that works well for almost anyone:

1. Have an emergency fund with 6-12 months of expenses.  Finally, due to the Fed raising interest rates, the savers among us can now earn ~5% risk-free.  I would be happy to point you in the right direction.
2. Save as much as 15% in your company’s 401k.  If 15% is too difficult or conflicts with other aims, at the very least always contribute as much as your company’s match.  It’s free money - don’t leave it on the table.
3. Get out of debt.  It is liberating!  Eliminate all consumer debt - this includes vehicle loans, credit cards, and anything else but your home.  Let’s discuss whether it makes sense to pay down your mortgage ahead of time.
4. Max out your IRA (and HSA).  Fully fund your IRA account (Roth IRA is generally preferred), and also max out your Health Savings Account if you have one.  HSA’s are like a superpower - if you aren’t familiar let’s talk and I’ll explain why.
5. Are you 50+? The IRS allows  catch-up contributions for retirement savings. For a traditional or Roth IRA, the contribution limit is $7,500 in 2023.
6. Invest using an asset rotation strategy.  Perfect doesn’t exist in investing.  However, momentum based asset rotation (tilting a portfolio toward performing assets and away from under-performing assets) has been proven to minimize painful drawdowns that we cannot afford as we enter retirement.

A disciplined plan that allows for consistent savings, a modest lifestyle based on your income, and minimal debt will serve you well as you travel the road toward financial security and a comfortable retirement.
I hope you’ve found this to be educational and informative.  If you would like to discuss making your plan, please feel free to give me a call or text me at 360-776-6600 - Jon