Retirement is one of the most important life events many of us will ever experience. The savings, investments and other income sources needed to provide a comfortable lifestyle in retirement require years of prior planning. The forethought, complexity and time it takes to build such a plan may seem daunting. Here are five steps to making that plan and staying on track.
Step 1: Set Your Goals
This is the fun part: dream about your life in retirement! When do you want to retire? How and where do you want to spend your time and money? Retirement is meant to be a time of freedom! See and define the vision for your future clearly.
Step 2: Determine Your Needs
Identify the dollar amount needed for your retirement. Generally speaking, retirement income may replace 80-100% of your current annual income. Everyone’s needs are different. Participants in the Wespath pension plans can obtain a retirement needs assessment from the EY Financial Planner Center. A certified financial planner is available at no cost on an unlimited, confidential basis. There are many other retirement calculators that can be found online.
Step 3: Calculate Your Current Retirement Assets
How much have you saved already for retirement? Gather statements on account balances. Project pension benefits. Participants in Wespath pension plans can register to use the Benefits Access website to estimate their church pension plan benefits. EY Financial Planners, Wespath’s Retirement Team, and the NC Conference Pension Administrator/Educator are all available to assist NC Conference clergy and lay participants in their retirement planning. Use the Social Security Retirement Estimator to factor in that potential retirement income. NC Conference clergy members are strongly encouraged to participate in both the church pension plans as well as the Social Security system.
Step 4: Identify Any Gaps
Is there a gap between your needs and your assets? There are strategies you can employ to narrow that gap. Start with your monthly budget and look for ways to spend less today so that you can save more for the future. Are you taking advantage of all your pension plans through work and earning any matching contributions from your employer? Reconsider your investment strategies and perhaps take a more aggressive approach. Change any of the assumptions you made when determining your needs, such as the date you retire or your expenses in retirement or working part-time in retirement.
Step 5: Monitor Your Progress
Just as you go to the doctor for an annual health checkup, reviewing your retirement plan on at least an annual basis will help ensure that you are on the right track. Adjustments can be made along the way to help you live out your retirement dream.
*Information sourced from EY Financial Planning Center. Participants in the Wespath pension plans can create an account and log in for more retirement planning information.