Last week we wrote about the majority of 401 (k) participants accumulating more debt than retirement savings. According to a recent survey done for Wells Fargo, only 29% of middle-income people have a written retirement plan. This is even with the dramatic results demonstrated from having a written plan.
The Benefits of a Written Retirement Plan
The study pointed out that people with written plans saved a whopping 3 X more toward their goal than people without a plan! And that number is regardless of income. In other words, this held true regardless of level of income.
Not surprisingly this also ties in to people having more confidence if they have a plan. 70% of those with written plans said they are confident in their future retirement. This compares to only 44% for those who don’t.
Rather eye-opening statistics, and based on our experience quite accurate. In addition to all that, it’s not younger people not planning. In fact people between the ages of 30 and 39 have the highest percentage of written plans at 34%. In fact of people near or at retirement, 31 – 33% have written retirement plans.
Writing it down: Plan for retirement success
It’s clear from this study that whether you’re in your 30’s, 40’s, 50’s, or even 60’s, it’s time to create a written retirement plan! Creating one can be an eye-opening experience for some, but does not have to be a daunting task. There are a variety of ways to do it, and generally simple is a good way to start:
- Do it yourself – People can do this on their own, and we encourage folks to at least start here. However if you are within 10 years of retirement, it is likely money well spent to hire a financial planner. Work on the basics of income and expenses, and take advantage of some of the forms here. Once you get through that, you need to consider how to plan to invest in retirement. This could be provided through a 401 (k) at work, or many other options available.
- Hiring a professional – There are a number of benefits associated with investing in hiring a financial planner. First, some people can’t or know they won’t do it on their own. Everyone is busy with family, career, etc. and it’s difficult to find the time. Second, it provides accountability to make certain the plan gets done, and someone to bounce ideas and “what-if’s” around. We always recommend a Certified Financial Planner™ to work with.
Make certain you account for future inflation when projecting your future retirement expenses. We anticipate inflation will likely increase somewhat over time. Also include your spouse or partner in the project…it’s really important! Make sure you’re both on the same page with retirement goals and vision.
Some additional tools that can help:
- There’s an excellent article in MarketWatch, written by Robert Powell “How to know if you have enough to retire”
- Go to the Social Security website to see how much income you can anticipate