No Retirement Plan. Now What?

by Neal Frankle, CFP ®

If you are nearing the finish line of your career with no retirement plan it can be a frightening prospect. How much income will you need when you retire? Where is it going to come from? How long will you need it? It’s no wonder that many people are terrified about retiring.

But retirement doesn’t have to be a scary affair. In fact, if you take the following 5 steps, you can make a smooth retirement landing despite getting a late start on your plan. Let’s get going.

1. Action Plan

If you are starting to plan your retirement late in the day there is no time to waste . This is true. But you don’t need to panic either. You can still take control of your financial future if you get into action. Your first task is to gather the critical data. Fortunately there are only 3 or 4 pieces of information you’ll need to nail down:

I can’t go into detail in answering each of these questions here but I’ve written multiple posts that should really help you find your own answers.If you need help finding those answers, click the links above and below and read on Pilgrim. As an alternative, you can also connect with me..  Just let me know how I can help.

It’s tough to answer all these with absolute certainty but a close approximation is all you need. Don’t get uptight Pilgrim.  It’s all good.

And keep in mind that you have more information than you might think.

  1. Your bank statements tell you how much you spend on average each month.
  2. You can contact Social Seciruty and previous employers to determine what your retirement income will be.
  3. With a little research, it’s easy to figure out how much retirement income your investments can generate.

Let’s move on.

2. Smaller Footprint

Let’s say you do the leg work and determine that you are going to have a retirement deficit. That’s OK. All that means is that it’s time to make some decisions. You can either reduce your spending, create some part-time income or a combination of both. If you decide that you’re going to make spending cuts, I suggest that you implement as many of these changes as soon as possible. You are reshaping your lifestyle and it will take some getting used to. The sooner you start easing into your new budget, the better.

3. New Income Sourcesno retirement plan

If you decide to work after retirement , you also have a few options. If you don’t need that much cash one alternative is to go for something fun. There are plenty of employers who are dying to hire seniors. You’ll likely have little problem finding one that offers a job you’ll enjoy doing. You probabaly won’t make a ton of dough but if your deficit is small that little extra cash could make a big difference.

Another option I like is to start a side business. There are a number of business opportunities you can launch without spending much money and if you are patient, this side business could blossom into something significant. If you are leaning this way, I highly encourage you to start building this now. Daylight’s burning friend.

4. Budgeting

Once you retire, tracking your spending is about the most important thing you can do. This way you’ll know if you can afford your lifestyle. If not you can make changes before you find yourself in hot water. I personally like using YNAB software to track my spending but you can use any tool you like as long as you do use it.

5. Become A Phaser

If all else fails try to delay your retirement and/or talk to your employer about a phased retirement. This will give you even more time to solidify your retirement plan and implement it.

My accounting professor told me that anything worthwhile takes work. Turns out he was right. Even if you are just now building your retirement plan it’s not too late. You will probably have to step outside your comfort zone to get all these items in place. But if you take these steps seriously and get into gear, your retirement reality will improve much quicker than you think.

How are you planning your retirement? When did you start this plan? Have you made any changes along the way? What were they?

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