Erickson Advisors - Linda Erickson - HeadshotLinda P. Erickson

Linda P. Erickson, CFP®, is the president of Erickson Advisors and a registered principal offering securities through Cetera Advisor Networks, LLC, 336-274-9403 lindae@ericksonadvisors.net.

The Baby Boomers are retiring, and we want our retirement experience to be as “pedal to the metal” as life has been for us up until now. We want it all, and we want it now. Tomorrow can wait until, …well, tomorrow.

Unfortunately, for many retiring Boomers their experience is not and will not be what they had imagined. In a recent article, author on Retirement issues, Julia Valentine, writes “most Americans actually admit to being unprepared for retirement, with the majority unsure of how much money they will need in retirement, also operating without any kind of plan or intention. Most concerning, over one third of Americans have NO retirement savings whatsoever!” (JoyCompass.com)

If you are among the many who have no plan, no real savings or some combination of those conditions, what should you do? The following are some Do’s and Don’ts for anyone approaching retirement who can identify with Ms. Valentine’s statement above.

DO’s

  • Do (finally) sit down and really understand where your income will come from in retirement – Social Security, Pension, Annuity. Write it down.
  • Do a sketch of how you spend your money. Break it down into “wants” and “needs.” Mortgage or rent is a need; shoes and cable are “wants.”
  • Do a reality check, comparing your income needs with your (certain) income sources. Many retirees will have to face the hard fact that their retirement lifestyle will not be as imagined. The goal should be, however, a retirement free from financial stress. This will only come with keeping living costs lower than certain income.
  • Do begin to aggressively pay down credit card and other consumer debt. If you are already retired and find that now you cannot make ends meet, contact a reputable credit counselor. The local Credit Bureau should have a list of professionals who might help you emerge from debt.
  • Do get in front of a looming difficult situation. If you cannot support your current lifestyle without your current income, start paring expenses. Consider working with a financial planner who can help you with calculations and projections.

DON’Ts

  • Don’t panic.
  • Don’t look for quick, double your money schemes.
  • Don’t put all of your money into last year’s winning investment. It’s more likely to be this year’s underperformer.
  • Don’t sell all of your “losing” investments, holding this money in cash until “better times” come back. You will likely miss the next opportunity or the next big uptick in the market.
  • Don’t withdraw from your 401(k) to pay down credit card debt.

Whether you believe you are prepared for retirement or not, using one of the many tools available through websites or from most mutual fund companies will be an eye-opener (not so good) or, for those who started planning early, confirmation (very good) that the income you would like to have is likely to be available.