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Published on: 01/18/2024 • 7 min read

What Are The Benefits of Thinking About Retirement Expenses Now?

Devising a sound retirement strategy might seem unnecessary if you’re someone who has consistently been financially secure. You may wonder why you would bother with your retirement expenses when your retirement years are still a distant reality, and while it’s tempting to keep your focus on building and enjoying your wealth now, planning for your future is just as critical. So, what are the benefits of thinking about retirement expenses now?

Early planning not only works to provide long-term financial security but it can also offer peace of mind, regardless of your current wealth status. Here is why it’s advantageous to start thinking about how you’ll spend your golden years today.

Is it better to save for retirement or spend now?

The immediate and tangible appeal of spending now can often overshadow the abstract and distant benefits presented by high-net-worth retirement planning. While the amount you allocate to saving vs. spending will differ depending on your financial landscape, your current financial plan should work to accommodate both long-term thinking and short-term fulfillment. However you divide up your spending and saving, your financial plan needs to include at least some retirement planning.

Why is it important to think about retirement now? 

The answer is simple: time. Time allows your money to grow and compound, meaning you can potentially earn more return on your investments over a longer period. In other words, you can plan to continue living your comfortable lifestyle (or even elevate it) in retirement. 

This also gives you the opportunity to make adjustments along the way, such as increasing contributions or changing investment strategies, if needed, as your circumstances change.

Benefits of early retirement planning

Aside from the obvious financial benefits, there are other advantages to thinking about retirement expenses sooner rather than later.

1. Peace of mind

A major benefit of retirement planning early is that the anxiety and uncertainty often associated with not having enough saved for retirement may be eliminated by beginning your planning early on. Conversely, procrastination may result in individuals having to save a substantial amount of their income later on, causing significant financial stress and impacting their quality of life later in life.

Additionally, by starting early, you have more time to analyze and strategize your retirement savings, making it easier to make sound financial decisions and choose options that are often considered safe investments for retirement. This can lead to better money management skills, which can further reduce financial stress and allow you to enjoy your retirement years without constantly worrying about your retirement income.

2. Ability to adapt

Early retirement planning gives you the ability to adapt and refine your strategy over time. In some cases, this could allow you to take calculated risks with your investments and perhaps provide the opportunity to recover from any potential financial setbacks, allowing you to respond to market conditions whether you’re investing in a bullish vs. bearish market. 

Moreover, early planning helps provide some flexibility to adjust your retirement goals as your life changes. For instance, you may have initially planned to retire at 65, but with a well-funded nest egg, early retirement could become an appealing option. Conversely, should unexpected expenses arise, you can delay retirement as needed without significantly disrupting your quality of life.

Essentially, early planning gives you options. If you want to start a second career, pursue a passion project, or travel the world, you’ll have the financial resources to make those dreams a reality. 

The key is to remember that retirement isn’t just about stopping work — it’s about the freedom to live the life you want. Therefore, the adaptability that comes with early retirement planning isn’t simply advantageous, it’s paramount to ensuring that you will have a fulfilling retirement.

3. Protection against unexpected events

Early retirement planning in partnership with the best retirement planners can serve as a protective shield against unexpected or unfortunate events, such as health issues or economic downturns.

By accounting for these possibilities in your retirement planning, you create a safety net that can help safeguard your retirement savings and provide you with the ability to tackle unforeseen expenses. 

Furthermore, early planning allows you to purchase insurance products, like long-term care insurance, at a lower rate. These insurance products can be beneficial in working to secure your finances against unexpected health-related expenses in retirement. 

Life doesn’t stop once you’re retired, and neither do life events. This is why the importance of protection against unexpected events cannot be overstated, as it helps you maintain your lifestyle and meet your retirement goals, regardless of what life throws your way.

4. Leave behind a legacy

Early retirement planning isn’t just about planning your own comfort and security in your golden years. It can also be a powerful tool for leaving a lasting legacy for your loved ones. 

By building a substantial nest egg, you can make sure that your children, grandchildren, or other beneficiaries have a financial head start in life. This might manifest as a generous inheritance*, or it could mean being able to fund higher education costs, seed money for a business venture, or a down payment for a first home. 

In addition to starting your retirement planning early, having a well-planned estate can help prevent potential conflict among your heirs and plan for a smooth transition of your assets. Early retirement and estate planning doesn’t just benefit you — it can also be your pathway to leaving a meaningful and enduring legacy that can positively impact the lives of your loved ones for generations to come.

*Learn more about how to avoid inheritance tax in Texas.

5. Business continuity and succession planning

Early retirement planning for small businesses can play a significant role in estate planning and exit planning, helping to plan for a smooth transition of your business assets to your heirs. 

Proper planning allows you to decide who will take over your business or how its assets will be distributed after your retirement. It also helps to minimize potential tax obligations, making sure your heirs or successors receive the maximum benefit from your estate. 

Unlike employees of large organizations, small business owners don’t typically have access to corporate pension plans. Therefore, planning early for your retirement is crucial to set up a steady income stream in the later years. Options such as SEP-IRA, SIMPLE IRA, or a solo 401(k) can be beneficial for small business owners, providing tax advantages and working towards a secure retirement. 

How to plan for retirement

Now that we’ve discussed the benefits of early retirement planning, let’s consider some steps you can take to start your retirement planning in Austin, or anywhere in Texas, today.

  1. Define your retirement goals: The first step in retirement planning is to determine what you want your retirement to look like. Do you plan on traveling extensively, buying a vacation home, or pursuing a hobby full-time? Defining your retirement goals will help guide your financial decisions.
  2. Calculate how much you’ll need: Once you have an idea of your retirement goals, calculate how much money you will need to achieve them. Consider factors such as your desired lifestyle, inflation, and potential healthcare costs.
  3. Start saving early: The sooner you start saving for retirement, the better. Even small contributions made consistently over time can add up significantly.
  4. Create a budget: Creating a budget can help you manage your expenses and prioritize your retirement savings.
  5. Take advantage of employer-sponsored retirement plans: If your employer offers a retirement plan, such as a 401(k) or pension, take advantage of it. These plans often include employer matching contributions, which can boost your savings significantly.
  6. Consider diversifying your investments: It’s essential to have a balanced and diverse investment portfolio to mitigate risk and maximize returns. Consult a financial advisor to determine the best investment strategy for your retirement goals.
  7. Regularly review and adjust your plan: As you near retirement, regularly review and adjust your retirement plan as needed. Life circumstances and financial markets can change, so it’s crucial to stay on top of your savings and make necessary adjustments.

By following these steps you can start planning for your retirement today, working towards a secure financial future without sacrificing your present-day goals. Remember, it’s never too early to start planning for your retirement, but it can be too late if you wait too long. 

Don’t wait another day to start planning for your dream retirement. Let’s talk!

So, what are the benefits of thinking about retirement expenses now? The temptation to put it off can be strong, but starting early allows you to explore options, tailor a savings strategy, benefit from compound interest, and gain peace of mind for a secure retirement.

If you’re ready to start planning for your retirement, Avidian Wealth Solutions can help. We offer high-net-worth retirement planning in Houston, Austin, Sugar Land, The Woodlands, and throughout Texas. Our team of experienced wealth advisors can help you create a comprehensive retirement plan that aligns with your goals and helps you plan to achieve the retirement lifestyle you desire.

Take charge of your retirement by starting early and schedule a conversation with one of our advisors today!

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