5 Mistakes to Avoid in Creating Your Retirement Goals

5 Mistakes to Avoid in Creating Your Retirement Goals

Now is a great time to review your retirement goals and determine how well you are doing at accomplishing the goal you set for when to retire and what lifestyle you will live in retirement. If you are like many people, you might not have a clear idea if you are on track to achieve your goal. In fact, many people have not yet set a specific goal for their retirement. Instead, they tell themselves something like, “hopefully I can retire when I am 65, but who really knows.”  Many people avoid setting goals for retirement because it seems too hard or a little scary to think about.

The fact is if you want to have a dignified, comfortable retirement then you need to understand where you currently stand and what you need to do to live the life you want after the retirement party ends.  It doesn’t need to be an intimidating process and, in fact can be very rewarding. Setting a specific retirement goal gives you a clear target to aim for. You are much more likely to hit a target if you have one to aim for.

So, how do you set a specific target for retirement and then monitor your progress? Working with a financial advisor to develop a written financial plan is one of the best ways to do this.

Here are 5 mistakes to avoid in creating your retirement plan goals and how working with a financial advisor to create a powerful plan could help lead you to the wealth, success, happiness and prosperity you seek.

1. Generic goals – many people set very generic goals that do not create a vision of the life style they want to enjoy and what they want to do in retirement. Be as specific as possible on what you want to do, how often and what financial resources you will need to do these things.

No matter what the goal is, the more specific you are the better chance you have of achieving it. Determine what your expenses will be in retirement and what you will need to support your retirement life style. Remember to add in for things you want to do. If you want to travel set a goal for how often and what your budget should be. If you want to support a charity, set a goal for how and how much. The point is to be as clear as possible so these goals can be built into the plan. Once you have created a clear vision of the goal and locked it into your subconscious then you will find that you will be more motivated toward the accomplishment of the goal. Your advisor can help you develop a clear vision and build a plan to support it.

2. Inability to measure results – if you have a goal but you do not have a way to measure your progress then how will you know if you are getting closer or need to make adjustments? A written financial plan should allow you to measure your progress toward your goal. Measuring your progress allows you to make adjustments along the way so you stay on track. Make your goals measurable and they will be more powerful.

3. Setting unachievable goals – if the goals you set are so outlandish that you simply cannot reach them in the time you have before your planned retirement then you will become discouraged and give up. It’s okay to establish stretch goals but not unachievable ones. Your financial plan should be reviewed regularly and adjustments made along the way. A plan should not be static but will require you to make adjustments as you progress.

4.  Leaving unavoidable expenses out of your plan – healthcare and medical planning are critical components of any worthwhile financial plan. No one really wants to plan for medical expenses but it is just a reality that cannot be avoided. If you do not build these items into the plan you may be overestimating your chances of achieving your goals. Research indicates that only about 55% of financial plans built today include these healthcare costs. Be sure to cover these in your plan.

5. Setting the wrong timeframe for retirement – While many people want to retire at as young an age as possible there are many others that want to work into their 70’s. Determine what your goal is but again, be reasonable given your financial status. A financial plan will help you figure the best age for you to retire and live the life style you desire.

Also, do not underestimate the length of time you will need to fund your retirement. Research shows that most consumers believe they will retire at age 62 and need to fund retirement for 22 years. Statistics show that most consumers actually retire between the ages of 63 and 68 and will need to plan for up to 30 years of retirement spending. Having the wrong timeframes can hurt your chance of success and that would be a shame.

Avoid these five common mistakes and you can build a financial plan that will give you a good chance of retiring when you want and living the life you dream of in retirement. Talk to your financial advisor about getting a plan in place or reviewing your current plan to make sure you have the goals you really want for your future.

These are the opinions of Dennis Kelley and not necessarily those of Cambridge, are for information purposes only, and should not be construed or acted upon as individualized investment advice.  Investing involves risk.  Depending on the types of investments, there may be varying degrees of risk.  Investors should be prepared to bear loss, including total loss of principal.  The strategies discussed herein are not designed based on the individual needs of any one specific client or investor.  In other words, it is not a customized strategy designed on the specific financial circumstances of the client.  However, prior to opening an account, Cambridge will consult with you to determine if your financial objectives are appropriate for investing in the model.  You are also provided the opportunity to place reasonable restrictions on the securities held in your account.