How Much Time Should You Spend On Retirement Financial Planning?
Would you believe some people give retirement financial planning less attention than planning a vacation, choosing a restaurant, or buying a television? It’s a bit scary, but it’s also true. Retirement isn’t an event, and it’s not something to buy.
If you want to keep your current standard of living for the long haul, you’ll need to allocate adequate time it takes to make it happen. So, how much time does it take?
Retirement Planning Should Take More Time than Planning a Vacation
While there are similarities between vacation planning and retirement planning–you need to decide how you want to spend your time, where you want to spend your time, and figure out how to pay for that–the big difference is time. Vacations might be a week or two. Retirement is the rest of your life (and sometimes as long as 30 years or more). Retirement is basically a 1,560-week long vacation.
So let’s say you spend 20 hours planning your two-week vacation. Perhaps you need to spend over 30,000 hours planning retirement. While 30,000 hours may sound onerous, ideally you create your plan over many years.
Retirement Planning Should Take More Time than Choosing a Restaurant
For some Americans, picking the right restaurant gets more than its fair share of time, especially when compared to planning an IRA investment. And only 36% of Americans owned IRAs as of mid-2019, according to the Individual Retirement Institute.
Saving and investing is a very important part of retirement planning. As such, it is worth it to spend time researching your IRA options. It can seem totally overwhelming. You might not feel that you have the expertise to make the right decisions. You know what kinds of food you like, so choosing a restaurant is fun and easy. If you don’t have investment knowledge, it is easy to understand why you might not want to spend time figuring it out.
The good news is that you have options for finding help: financial advisors, low-cost online investment resources, and retirement calculators can improve your chances of making a better decision. You can also just talk with your bank or human resources office.
Pencil in some time for learning about how IRAs work and how much you can contribute. They’re not intimidating once you know the ropes. If you’re not contributing to your company’s 401(k) plan, schedule an appointment with your benefits coordinator.
And it is almost never too late. When retirement is imminent, contribution maximum amounts are higher, which can help make up for lost time.
Retirement Planning Should Take More Time than Buying a New Television
It’s important to be a smart shopper, but it’s also important to secure your future. A new television will be outdated in a few years (and probably before your retirement arrives).
If you can spend the time to figure out contrast ratios, power consumption, and screen resolution for buying a television, then you can figure out your investment options.
You Need More than Social Security
It seems that many people think that retirement will take care of itself and that perhaps Social Security will be enough to get by.
For someone at full retirement age, the maximum monthly benefit amount is $3,011, and for someone aged 62, the maximum amount is $2,265 in 2020. Without a backup plan, such as an IRA and 401(k), your Social Security benefits will probably be less than you need.
Spend the Time But You Can Also Use Shortcuts
Retirement might seem far off, but every day it’s a bit closer. While you’re planning a vacation or thinking about a major purchase, the clock keeps ticking.
Retirement planning doesn’t have to consume your life. But it does merit at least as much attention as you’d give to finding the best steak in town.
Once you have an idea of what you want your retirement to look like, you might want to get some help making it a reality. Financial planners are retirement planning experts that can tell you exactly what you need to do. Online retirement calculators can also help you approximate options.