According to the principles of behavioral finance, there is one standout reason behind the difficulties involved in retirement planning: For most of us, it is very hard to picture ourselves in the distant future. It’s easy to think about this summer or even next year, and to make plans for goals or activities at those times. But because picturing yourself as a retiree can be difficult, saving for retirement feels like making plans for a stranger’s life.
And who wants to make small sacrifices and save money for a stranger? And yet, we will all reach the point in our careers when it’s time to retire. Since you don’t want to look back at your current self and wish you had taken Future You a bit more seriously, we all need to plan for retirement. If that distant future feels too vague, ask yourself these questions to help make it a bit more “real”.
What are my retirement goals? Like many people, you might hope to live debt-free. But what else do you want to do? Do you picture yourself traveling, pursuing certain hobbies and interests, or moving to a warmer climate? Some retirees even hope to pursue a second dream, in the form of a side business or pursuing a second college degree. Define your goals clearly, so that you can put a price tag on them.
What are my options? Luckily for you, federal employees can potentially enjoy three streams of income in retirement: Your annuity payments, withdrawals from your Thrift Savings Plan, and of course, Social Security.
As long as you continue in your position (and paying taxes) you’re working toward your annuity and Social Security. But what about your Thrift Savings Plan? Are you contributing up to the maximum amount each year? How is your account performing? Is there any other way to manage those funds?
Have I really put in the time? Many people assume that they have a basic retirement plan in play, but have you really dedicated yourself to reviewing all of your options? Most people spend hours planning for vacations, but very few of us dedicate that same attention to our retirement plans!
If you haven’t met with a financial planner, it’s time to take that next step. Give us a call, and we can walk you through all of your options, and help you put together a plan for your future.
