14 Signs Your Retirement Plan Is on Track

The call to action is now. According to PWC, a quarter of U.S. adults still need retirement savings. Conversely, only 36% feel their retirement planning is on track. To help you define where you’re at, we have compiled a list of 14 indicators that suggest a prosperous retirement.

1. You Have a Healthy Savings by Age 30

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Having savings is an advantage in the current financial landscape. A median retirement savings account of $120,000 will likely provide individuals approaching retirement (between the ages of 55 and 64) with less than $1,000 per month over a 15-year retirement.

Considering the current economic situation, it will be challenging to maintain a comfortable lifestyle with such an amount. You should find a side hustle if you need to earn a passive income to save some money.

2. You Began Saving Early

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Starting to save early–around age 25–can improve your chances of achieving a comfortable retirement plan. However, it may take some time and effort to do so. That’s why having a good understanding of mindful spending can help you in the long run. By saving early and learning about investments, you can set yourself up for a more secure future.

3. You Have a Written Retirement Plan

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A detailed, written retirement plan is the first sign you’re on the right track. This document typically includes your retirement objectives, sources of income, methods of savings, and strategies for withdrawals. It is a map that directs your financial choices and keeps you focused on your retirement goals.

4. Your Savings Goals Are Based on Expenses

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If your savings goals are tailored to your expected retirement expenses rather than arbitrary numbers, you’re planning wisely. By estimating your future living costs and planning accordingly, you ensure that your savings will meet your actual needs rather than leaving it to guesswork.

Oportun is an app that automatically analyzes your checking account activity to help you save money. Its “Set and Save” feature uses automation and AI to study your spending and income patterns.

5. You Have Diverse Investments

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A diversified investment portfolio spreads risk and increases the chance of steady growth. The reason why diversification is so important is that each asset class has its unique characteristics and reacts differently to market conditions.

With Acorns, you can invest spare change while you bank, earn bonus investments, and grow your knowledge. Investing in multiple asset classes, like bonds, stocks, and real estate, can lead to exciting financial opportunities and put you on the right path.

6. You Understand Your Withdrawal Strategy

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Knowing how you’ll withdraw your savings in retirement is a crucial step. Having a strategy for tapping into your retirement accounts in a tax-efficient manner that minimizes the risk of outliving your savings is smart planning.

According to Synchrony Bank, converting your retirement accounts to Roth IRAs may make sense if your tax rate will be higher when you retire than it is today. Because your Roth IRAs are already taxed, it can help limit your overall tax bill during retirement.

7. You’re Preparing for Healthcare Costs

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Suppose you’ve factored healthcare costs into your retirement plan and are exploring options like health savings accounts (HSAs) or long-term care insurance. In that case, you’re wisely addressing one of retirement’s most significant expenses. Note that HSAs are tax-advantaged and can be utilized to pay for qualified medical expenses. 

8. You’re Planning for Inflation

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According to Forbes‘ long-term projections of the FOMC from December 2023, core PCE inflation is expected to decrease from 3.2% in 2023 to 2.4% in 2024 and 2.2% in 2025. However, it is essential to remember that market conditions can be volatile in various areas, such as energy, housing, or food prices. If your retirement plan accounts for the average annual inflation rate, you’re safeguarding your future spending power.

9. You Have Plans Beyond Money

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A well-rounded retirement plan includes considerations for how you’ll spend your time, maintain social connections, and pursue hobbies. If you’re planning for the lifestyle aspects of retirement, you’re setting the stage for a fulfilling and balanced life. If you want to be worry-free after your 60s, stick to your financial plans, and you’ll be on the right track.

10. You’re Debt-Free or Actively Reducing Debt

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Entering retirement with minimal or no debt reduces financial strain and preserves your savings. This strategy involves concentrating on your smallest debt while still making minimum payments on all your remaining debts. Any additional money you have should be put towards paying off the smallest debt. If you’re aggressively paying down high-interest debt before retirement, you’re making a wise move for your financial future.

11. You Review and Adjust Your Plan Regularly

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A retirement plan isn’t set in stone; it needs regular reviews and adjustments in response to life changes and financial shifts. If you’re actively monitoring and tweaking your plan, you’re staying adaptable and proactive.

12. You’re Educated About Social Security

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Understanding how and when to claim Social Security benefits can significantly impact your retirement income. Several factors should be considered when making this decision, including your age, career history, and financial situation.

Your monthly benefit can be reduced if you claim benefits before the full retirement age, but if you wait until after the full retirement age, your monthly benefit will increase. You’re leveraging this vital resource if you’ve researched your options and developed a claiming strategy that maximizes your benefits.

13. You Have a Plan for Longevity

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According to the CDC, the life expectancy in the United States in 2022 was 77.5 years, a 1.1-year increase from 2021. Acknowledging the possibility of a long life and financially planning for it means you’re less likely to outlive your savings. Strategies like annuities or other lifetime income sources are signs of thoughtful longevity planning.

14. You Feel Confident About Your Retirement

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Ultimately, you want to feel confident and at peace with your retirement plan. This indicates that you’re on the right track. When you take comprehensive steps to secure your financial future, you can have peace of mind and enjoy your golden years.

Sailing Smoothly Into Retirement

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Knowing these 14 signs when planning for your retirement will help you feel confident that you are on the right path toward a secure and happy retirement. It’s not just about saving money. It’s about creating a future that reflects your dreams and goals. By ensuring these things are a part of your retirement plan, you can be ready for a life of financial security and enjoy the rewards of your hard work in retirement.

15 Reasons Florida Is the Best Place to Retire

Daytona Beach, Florida
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Crystal-clear beaches, year-round sunshine, and Disney World are just some of the things Florida has to offer. A staple for retirees, this gorgeous haven might be the perfect place to spend your golden years.

15 Reasons Florida Is the Best Place to Retire

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Author: Luana Cantuarias

Title: Contributing Writer

Expertise: Blockchain, B2B, and SaaS

Bio:

Luana Cantuarias is a seasoned finance writer with over a decade of experience in the realms of Blockchain, B2B, and SaaS.