5 Steps to Get Your Retirement Planning Back on Track

It’s critical to establish your retirement income goals and regularly adjust your investment strategy to achieve those goals. These steps can help get you on track.

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by NEA Member Benefits

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Key takeaways

  • A solid retirement strategy consists of more than saving money in retirement plans and investing in growth-oriented stock funds.
  • As you move into your prime earning years, you need to establish your retirement income goals and regularly adjust your investment strategy to achieve those goals.
  • The first thing you should do is get a read on where your retirement planning strategy stands today.

Early in your career, retirement “planning” consists mostly of saving some money in retirement plans and investing in growth-oriented stock funds. When retirement is so far away that it’s not even a blip on the horizon, you’re more likely to focus your energies on other aspects of your financial life.

But as you move into your prime earning years, and then when retirement age actually gets penciled into your mid-range calendar, it’s time to get more active in managing your retirement savings. You need to establish your retirement income goals and regularly adjust the many moving parts of your investment strategy to give yourself the best chance at hitting those goals.

Here are five steps that can help get you on track (or back on track). 

1. Run your numbers

The first order of business is to get a read on where your retirement planning strategy stands today. Launch the NEA Retirement Income Calculator, which has been designed specifically for educators, plug in relevant data (Some of your personal information will be pre-populated, along with your expected state pension benefit), and run the calculation. See if you’re facing a retirement shortfall based on your current strategy. If so, start playing with your retirement plan contribution amounts, investment returns, retirement age, and other variables to see what changes you’ll need to make to reduce or eliminate your shortfall.

2. Adjust your paycheck deductions

Depending on the results you get from the calculator, consider adjusting automatic paycheck contributions into your 403(b) plan or IRA. Work with your accountant to make sure you are taking the proper number of standard deductions to maximize your take-home pay while minimizing any end-of-year tax burdens from underpayments.

3. Reassess your investment mix

As you get closer to retirement age, you may want to gradually shift your investment portfolio to a more conservative mix of stocks and bonds. For most people, that means reducing the percentage of stock funds and increasing the percentage of bond funds.

But be careful in your efforts to reduce investment risk: You still want growth potential from your investments because your savings will have to produce retirement income for decades to come—continuing after you retire. Historically, stocks have been the best way to do that. If you swing the pendulum too far towards lower-risk bond funds, your investment returns may not even keep up with inflation.

Try out different projected investment returns when you run your numbers on the calculator to see the returns you may need to strive for. Then try to find the right balance between long-term growth and short-term safety with your investment mix. For more on managing your investment portfolio, see this article.

4. Review your benefit elections

The end of the year is often the time when you need to make workplace elections for benefits like medical plans, vision plans, life insurance, and disability insurance. Premium costs are constantly rising so it pays to study your options and balance your needs against the expenses.

Update your beneficiary elections on insurance policies and retirement plans. This is particularly important if you’ve had a major life change such as a marriage or divorce. Determine if you still need all of your insurance policies. For instance, if you have several life insurance policies, but some of your kids are grown, you may not need as much coverage.

5. Talk to an advisor

English teachers generally aren’t expected to teach algebra, even if they’re pretty good with equations. There are math specialists for those classes. Likewise, unless you’re an expert in financial planning, it might be a good idea to get a professional’s take on your retirement planning decisions. An advisor can review your entire financial plan and help you hone in on the areas that need tweaking.  Even if you don’t end up hiring a financial planner to manage your assets, a review may help you make better decisions going forward.

You can ask friends and colleagues for referrals, or go online and search for Certified Financial Planners in your area at The National Association of Personal Financial Advisors (NAPFA). For more on the benefits of hiring a financial planner, see this article.

Retirement planning is a hands-on activity. And the closer you get to retirement age, the more hands-on you need to be as you fine tune your strategy and find that balance that will help you reach your retirement income goals. The five steps above offer a solid foundation for keeping everything on track.

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