Retiring can be scary, but if you planned for retirement – how you want to spend your time when you’re not working, how you are going to pay for your lifestyle without a paycheck and how your retirement plans work when the time comes to use them – it doesn’t have to be. PAX Financial Group wants to take as much anxiety out of the process of retiring as possible, so we regularly host classes on retirement planning. Our next class discusses Social Security.
Even if you’ve taken classes on retirement planning and Social Security before, this may be a great opportunity for you to take advantage of. Why? Because when it comes to retirement planning, things are constantly changing.
When I worked as a teller at a bank in the early 2000s, every first and third of the month, we would have a long line of anxious customers wanting to deposit and/or cash their paycheck. Today, these lines are just a memory, as more and more people these days have their paychecks automatically deposited into their bank accounts. Bills are also often automatically withdrawn, and who needs cash anymore? Most people simply swipe their card when making a purchase.
Things have changed.
However, there’s something else to think about.
This convenience does have a price. There was a value at one point to depositing your check in the drive-through and requesting a few hundred dollars of spending cash – you weren’t charged convenience fees. What’s interesting is that a visit to the bank actually saved you money and you may not have even known it.
In addition to how we pay for things, our spending behavior has also changed because of modern technology. When we swipe our card, many of us forget that we worked hard for that money. The pain of paying with cash is no longer present. This mind game causes many of us to spend more when we swipe.
Today, debit cards, “one-click pay” and Smartphones often take away the necessary “pause” in spending that allows us time to think. It can be a mental hijack and it steals directly from your wallet. The research is clear: When there is less friction to buying, you will spend more.
How does this all connect to retirement planning and income streams like Social Security benefits? Well, technology has also changed how we get our funds. And just like debit cards changed the way we pay for things, new rules and regulations change how we’re able to receive our retirement benefits all the time. In fact, many people today wonder if they’ll even get Social Security benefits!
The bottom line is, even if you once sat through a class on Social Security, things may have changed as you get closer to pivoting out of the work world. It’s wise to refresh your knowledge, especially as retirement nears.
How Social Security works and what you “should” be doing to reach your retirement dreams also changes with age. What may have been very important in your 30s may not be such a big priority in your 50s. The same is true when it comes to the amount of risk you’re taking in your investment portfolio.
For example, in 2008, I co-founded a radio show called “Financial Myth Busters.” I spent much of my airtime bashing annuities, and for good reason. First, annuities were pitched to people in a way that promised incredible investment performance without any risk. This sales approach was far from the truth. Salespeople with the education of a weekend life insurance exam discussed stock market related concepts. Then, add to these horrible sales practices, the commissions related to the sale of the products were so high that I developed a bitter taste for annuities.
However, years later, my thinking evolved. The collision of stock market fears, annuity product changes and increased oversight focused on elderly protection helped change my perspective. Additional progress still needs to be made with annuities to establish them as a friendly investment option. However, today, PAX Financial Group has carefully identified the role annuities play in our clients’ lives.
As we age, our points of views change, our retirement goals change and the rules surrounding retirement change. So educate yourself and take as many classes on retirement planning as you can.
Social Security isn’t the only concern people have about their retirement. We hear many of the same questions time and time again:
- How does my 401k work?
- How does Medicare work?
- What’s the difference between a Roth and a Traditional IRA?
- Am I saving enough for retirement?
- What insurances do I need?
- What do I need to have the right estate plan in place?
- What tax benefits do I qualify for? What other programs can I take advantage of?
- Are there benefits to relocating?
Classes on retirement planning can cover any and all of these concerns. (We discuss many of them on our blog.)
Education is key and talking with a financial advisor can help provide peace of mind that a proper plan is in place to reach your retirement goals. If something does come up, a financial advisor can also help you get back on track.
Planning with a Professional
Talking with a financial advisor ahead of time can be extremely beneficial. A financial advisor should be able to help you plan for the “what ifs” in life. An established financial advisor will have seen different scenarios, experienced different markets and heard common concerns and issues before. The right financial advisor can take your personal situation and help create a plan that works for you.
There are many things to consider when planning for retirement.
- How will you structure your days in retirement? What will you do?
- Are you taking the right amount of risk?
- When is the right time to start planning for retirement?
- How do you handle a divorce?
- What if you find yourself having to care for your parents? Your adult children?
(Again, we discuss many of these concerns on our blog.)
Retirement doesn’t have to be scary. Do your homework. Talk with a financial advisor, sign up for classes on retirement planning and educate yourself before it’s time to walk away from work and therefore, steady paychecks.
This material is provided by PAX Financial Group, LLC, the opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.