Everyone has good intentions when it comes to planning for their retirement, but a lot of the times people go about it the wrong way. I sit down with a lot of people from different stages in life and felt compelled to sit down and share three important steps that are vital when trying to create a retirement plan.

When planning for retirement keep in mind that all the current events, market situations, and all the other stuff that's happening when you're planning isn’t so critical as you are planning and forecasting your retirement in the long-term. Keep in mind that it's the long-range outcome that counts.

Do not focus on whats happening with all the outside factors that affect your portfolio daily. I’ve seen and heard people talk about all the market events and situations that affect their portfolios on a minute basis. Remember focus on the long-term, phycological factors try to influence you do not let those feelings interfere with your plan. I’ve also seen people who are passionate about a fund or stock and put their entire resources into 1 or two mutual funds.

Some people seem to think they have it all figured out and have tools, software, and other things to help track, and influence their decisions, most of the time this is insane and they find themselves working against their goals. They got it backward. The process should be followed along these guidelines:

1. What is your goal?

Make sure you know your goal, what do you want to achieve? Are you trying to retire at a certain age? Maybe maintaining a certain lifestyle is your objective or maybe being financial free would be important. My goal is to be self-sufficient, I do not want to burden my kids with any of my obligations, I also want to leave a legacy behind for my three children. I also have a target goal of when I would like to retire. I am also planning on retiring with a certain lifestyle as well.

2. What is your strategy to get there?

When setting up your retirement plan keep these elements into consideration in this step:

• Create a strategy to cover your expenses through the rest of your life. To do this you need to know your total expenses. Make inflation part of your plan. Consider a plan on how to adjust to any income and expenses that could change in the future. Create a plan to protect your assets against longevity risks. Just make sure you create a plan to cover your self against outliving your income.
• Prevent your self from drawing monthly as this will help protect and preserve your assets. Always reanalyze and reassess your risk tolerance. Make sure you understand how volatility affects your portfolio, always look at ways to minimize and reduce risk through the years as you approach your goals.
• Make sure you take care of your responsibilities, creating a tax strategy also helps to make sure you're taking care of your legal obligations and how to maximize your leverage of money so that you can make sure you keep more of it for your family. Make sure you have a plan when taxes change. Consider pre-tax or after-tax for different types of accounts that are available.
• Plan out your health care during this part of you're planning process. Consider medical costs, long-term care, and other healthcare concerns that may be specific to your situation.
• If your plan is for you to outlive your money consider plans to secure a strategy to leave your legacy, This part of the planning process you should consider how your significant others will bet your resources in the most tax-efficient way, this is important as a majority of families end up in probate. Plan on working with tax attorneys and estate so that way you can prevent your IRA from being fully taxable to your beneficiaries.

3. It's time to choose the best product to meet your goals

Now is the time to choose your financial tools to get you to your goals. This could be overwhelming as when you approach this part of you're planning you may want to consider meeting with a financial advisor, but I recommend doing this at the first stage of planning as well. At this stage of you're planning you will find your self-faced with plenty of products to choose from, these products include stocks, bonds, mutual funds, annuities, real estate, commodities, life insurance, and other products available there are too many to name.

Sitting down and visiting with a financial planner can help guide and assist you in this area, you may have lots of questions and they have the software and tools to help you forecast, plan, and analyze your needs and wants. You cannot build wealth with just one product, you have to plan on using more than one resource in order to get to your goals, for example, if you think you're going to achieve your goals by just creating a 401(k) or by a mutual fund you will find your self-short of your goals and dreams. I sit down with lots of individuals and families and they feel confident that by owning a 401(k) or a mutual fund they feel they are 100% confident they will be well off. When I sit down and show them the numbers a lot of the times the software and financial plans I provide can show them shortfalls of their goals because they fail to factor in important elements such as inflation.

Find a reputable financial advisor in your local area. If you live in the greater Austin area I can help you with your financial planning.

Rene Gonzales
Senior Representative
Primerica
c. 512-568-7203
e. [email protected]
www.Primerica.com/ReneGonzales
Follow me on facebook: Your Financial Freedom Network