You probably have thought about what you’d like to do during your retirement years. But all your plans probably depend, to at least some extent, on your financial situation. What happens if you reach the age at which you wish to retire and you just don’t have the money you thought you’d have?
If this occurs, it’s time for “Plan B.” What does that look like? Here are a couple of possibilities:
Continue working. If you like your job, you may not mind working an extra year or so. You’ll be bringing in more income and contributing more to your 401(k) or other retirement account — and, perhaps almost as importantly, you may be able to avoid tapping into these retirement accounts, thus giving them more time to potentially grow.
Adjust your retirement lifestyle. It’s pretty simple: If you don’t save as much as you had planned for retirement, you probably can’t do all the things you wanted to do as a retiree.
Clearly, you’d like to avoid these “retirement contingency plans.” The most important move you can make may be to contribute as much as you can possibly afford to your IRA and your 401(k) or other employer-sponsored retirement plan.
While it’s important to put in as much as possible to your retirement accounts, you need to do more than that — you also must put the money in the right investments within these accounts. Your exact investment mix should be based on your individual risk tolerance and time horizon, but, as a general rule, these investments must provide you with the growth potential you’ll need to accumulate sufficient resources for retirement.
It’s a good idea to have contingency plans in place for virtually every endeavor in life — and paying for your retirement years is no different. But if you can make the right moves to avoid the contingency plans in the first place, then so much the better.
This article was written by Edward Jones for use by Evans, the company's financial adviser in Richmond Hill.
What is your retirement contingency plan
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