In general, Americans tend to be pretty optimistic. Even in this struggling economy and difficult job market, most American workers will say that the future looks better and that good times are on the way. Most American workers are also optimistic that their financial situation will improve next year and that their retirement plans are on track.
While many Americans are on their way to a decent retirement, a recent study found four common mistakes Americans are making with their retirement plans:
1. No Plan. If you don’t have a financial plan that leads you to retirement, you should start working on one now. Less than half of Americans have any financial plan for retirement, and even fewer have well defined financial goals. To get the security both you and your family desire, now and in the future, you have to create a plan.
2. Underestimating Needs. Many Americans who do have a plan have significantly underestimated the amount of money they will need in retirement. The study found that most people say they will need 62% of their current yearly income to retire comfortably, however 80% is the typical target for retirement income used by financial professionals.
3. Health Care Issues. With health care in a state of confusion, no one really knows what the impact of their health care will be on their long term finances. The study found that while many Americans said they would need savings to pay for five years of long term care, 40% of Americans said that long term care costs that are not covered by their health insurance is their biggest financial issue with retirement.
4. Asset Allocation Balancing. Many Americans struggle when determining the best asset allocation to meet their goals. When dealing with their retirement savings 83% of Americans say that they want to find the right balance between performance and safety, but 65% can’t decide how to balance those two goals. This is especially problematic for Americans nearing retirement because the interest rates on their savings accounts aren’t generating enough income but the volatility of the market presents a risk they can’t afford to take.
If you don’t have a functioning retirement plan you should meet with a financial professional to get started. A comprehensive financial plan should also include an estate plan. A well drafted estate plan can save taxes on assets inherited by your heirs, minimize the potential for costly disputes, and creditor protect assets left to beneficiaries. Arizona estate planning lawyer Abigail Neal works closely with her clients and their financial professionals to ensure that the client has a well functioning plan tailored to their individual needs. To get started with your estate plan, call Powers & Neal at 480-699-7992