Understanding Your Retirement Readiness: A Comprehensive Guide

In light of the recent Fidelity Investments® report, it's clear that retirement preparedness is a pressing concern for many Americans, and it's time we addressed it. Let's dive into the facts, figures, and strategies that can aid you in securing a comfortable future.

The Fidelity study reveals a startling five-point decline in America's Retirement Score since 2020. Worryingly, over half (52%) of those surveyed may need to make adjustments to their retirement lifestyle, while one-third (34%) are facing significant adjustments. This decline is primarily due to two factors: reduced saving rates and a more conservative approach to investing.

Here are three key reasons why people are not on track for retirement:

1. Reduced savings: Despite increased asset balances since 2020, Millennials and Boomers have decreased their savings rate.
2. Conservative investing: Amid financial uncertainties, nearly six in ten (57%) respondents are taking a conservative approach to investing, expressing concern about losing their savings.
3. Age-inappropriate asset allocation: According to the report, the percentage of respondents with age-appropriate asset allocation is at 59.4%, indicating a lack of balance in many portfolios.

To ensure a secure retirement, it's crucial to understand where you stand in your retirement timeline. Here's a simple step-by-step plan to help you evaluate your retirement readiness:

1. 📊 Assess your current savings: Look at your 401k balance. How much do you have saved up? Is it growing consistently?
2. 🗓️ Determine your retirement age: Decide when you want to retire and calculate the number of years left to save.
3. 💰 Calculate the retirement income you'll need: This should cover your estimated expenses during retirement. The general rule is to aim for 70-80% of your pre-retirement income.
4. 🔮 Forecast your 401k balance at retirement: Consider your current balance, annual contributions, employer match, and the potential growth rate.
5. 📝 Identify the gap: If your forecasted 401k balance falls short of the income you'll need, you have identified your savings gap.
6. 💼 Create a plan to bridge the gap: This could involve increasing your savings rate, adjusting your investment strategy, or considering other retirement income sources.

Taking control of your retirement planning can be empowering. And remember, it's never too late to start!

Finally, let's talk about something often overlooked when planning for retirement.

Consider this - your health. Good health is the real wealth, and it becomes increasingly significant as we age. Investing in your health today can save significant medical expenses in the future. Regular exercise, a balanced diet, regular check-ups, and adequate health insurance are all critical components of this 'health investment.' Your retirement years should be about enjoyment and relaxation, and maintaining your health will significantly contribute to this.

Moreover, remember that retirement is not the end of the road—it's the start of a new journey. Consider developing a post-retirement plan. This could involve starting a small business, exploring a new hobby, or volunteering. Having a purpose during your retirement years can keep you mentally and physically active, enhancing your overall quality of life.

No matter where you stand in your journey towards retirement, remember that it's never too late to start planning. Your future is in your hands, and with the right steps, you can ensure it's a prosperous one.

Stay on the path, keep moving forward, and embrace the adventure of retirement planning.

If you have any questions or feedback, feel free to email us at [email protected]

Best, Clark Balan