Financial Planning, Retirement

A recipe for retirement

DATE | 11/15/21
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While there isn’t one perfect retirement formula for everyone, there are some common ingredients that anyone can stir up to build their own recipe for success.

We wish it were easier, but in reality a lot goes into planning for retirement. It’s like hosting a holiday meal—you need to plan for how many people are coming, what you’ll serve, the ingredients you need, and the timing of the food. You know that some preparation and organization are going to be necessary to make the meal a successful one.

Much like coordinating a holiday meal needs a recipe for success, so does retirement planning. The recipe isn’t the same for all, but there are several common ingredients that most everyone should include as they create their plan.

Here are some of the ingredients for creating a delicious retirement.

Prep early

The earlier you start saving, the more you can take advantage of compound interest. Compounding is what happens when earnings on your investments are reinvested in your account. The reinvested earnings may also have earnings and then those earnings are reinvested and so on. Compounding can have an amazing impact on your retirement savings.

However, it’s never too late to start saving. Saving even a small amount each month is better than nothing. But the sooner you can, the better.

Dish up your savings options

If you’re not saving in your district’s 403(b) program, you may want to get started. Your savings receive advantageous tax treatment, and your district may kick in more through a match.

Member Benefits’ IRA program is also a great savings option. It gives you the opportunity to save for retirement outside of employer-sponsored retirement plans.

Blend in this fact: More spending in the future requires additional savings today.

You need personal savings to help fill any shortfall in your retirement income that may not be satisfied by your Wisconsin Retirement System (WRS) pension plan and Social Security benefit. As life expectancy increases, saving more is becoming increasingly important. According to the Centers for Disease Control and Prevention, the average life expectancy for a person who was 65 years old in 2018 is 85.7 years for women and 83.1 years for men—and life expectancy for both genders continues to increase. And as of 2021, one out of three 65-year-olds today will live past 90, according to the Social Security Administration.

Put your personal retirement contributions on autopilot through payroll deduction or monthly automatic withdrawals from a checking or savings account to make it easier to save. Your options with the 403(b) and IRA may differ, so check with your specific plan.

And don’t forget to increase your savings contributions on a regular basis. We have more information on annual contribution limits.

Measure up your savings goals

What do you want to do in retirement—travel, shop, golf, start a hobby? Do you plan to purchase a home or help your kids out financially? More spending in the future requires additional saving today. Be realistic about the price tags of the things you want to do knowing that the cost of living will continue to increase and that you may live longer than you expect.

Member Benefits has an array of free financial calculators that can help you as you clarify your retirement goals.

Mull over fees

You wouldn’t willingly overpay for food, so take the same approach with your retirement account. Costs matter, and you need to understand all of the fees involved. Our fees are simple—a Member Benefits IRA or 403(b) has one low annual administrative fee with an annual fee cap. (Mutual fund management and redemption fees apply.)

To make the most of your invested dollar, you want to minimize the fees you pay. Ask questions of the retirement savings providers you’re interested in—they should be able to provide a clear and complete explanation of their program fees. Learn more about fees.

Proceed carefully

As the school year gets in gear, you may see more financial representatives in your building. Be wary of those who sell high-cost financial products that have additional layers of fees (sometimes hidden) for things like insurance, wrap accounts, etc. Sometimes brokers and insurance agents can benefit more from product sales than the client.

Because seniors are a growing segment of investors, financial services firms are increasingly focusing their marketing and sales of investment products on investors in or nearing retirement. One common marketing approach is to invite seniors to an investment seminar and offer them a free meal. Be on the lookout for exaggerated claims or guarantees that are often part of the enticement. If it sounds too good to be true, it probably is.

If you really want to go to one, do your homework before the seminar and don’t rush your decision—let it percolate a while. A good investment will be available tomorrow or next week or next month…when you are ready and when you understand exactly where your money is going. Ask plenty of questions so you know what you’re buying as well as the risks and costs.

And don’t let anyone tell you that you need to move your 403(b) or IRA with WEA Member Benefits somewhere else when you retire. You do not have to move your 403(b) or IRA account when you retire or change jobs…even if you change careers. We will still be here to serve you. You can stick with us up to and through retirement.

Let your retirement savings rest

Have you ever pulled out a roast from the oven and were so hungry you cut into it right away? Chances are it was probably drier or tougher than you expected because you didn’t give it a little time to rest first. Patience is a virtue in cooking as well as saving for retirement. Withdrawing early from your retirement savings can be tempting at times, but it should always be your very last resort. If you pull funds out early, you’ll lose principal and interest, and you may lose tax benefits or have to pay withdrawal penalties. You can borrow money for things while you’re working, but you can’t borrow money for retirement.

Avoid the pressure cooker: A good investment will be available tomorrow or next week or next month.

Cook up a plan for the unexpected

When preparing a holiday meal, sometimes the unexpected happens…like you thought the turkey would be thawed in time, or a relative invites “just a few friends” to join in at the last minute.

Preparation and flexibility are keys for coping with those situations as well as for retirement planning. Health care costs are a major consideration that many people underestimate. Fidelity’s 20th annual Retiree Health Care Cost Estimate reveals that a 65-year-old couple retiring this year can expect to spend $300,000 in health care and medical expenses throughout retirement. For single retirees, the 2021 estimate is $157,000 for women and $143,000 for men. And the COVID-19 pandemic has prompted many to accelerate their retirement plans, which means paying for health care insurance until qualified for Medicare.

Inflation and the uncertain future of Social Security are other factors to consider. That makes it all the more important to make personal savings part of your retirement plan.

If you find you’re more limited in what you can afford to do in retirement than you expected, you may need to be more flexible. It could be you need to delay retirement for a while, move to a smaller place or cheaper locale, or work a part-time job.

Fold in a flexible mindset when it comes to your plans and expectations for retirement.

This may also help you postpone claiming Social Security or cover expenses during a market downturn. Weigh out all the opportunities available to you. Staying active by working or volunteering can also be a great way to pursue an interest or gain a new one, meet new people, and remain socially connected and challenged.

Mix in a financial advisor

According to the Department of Labor, only 40% of Americans have calculated how much they need to save for retirement. That’s likely because it’s just not always easy. One of the most challenging aspects of creating a solid retirement plan is striking a balance between realistic return expectations and a desired standard of living.

The financial advisors at Member Benefits can help you anticipate your future tax liability, get a real picture of your assets and challenges, and help you make necessary changes now before you retire. For Wisconsin public school employees, it’s important to work with someone who has a thorough understanding of 403(b) savings accounts and WRS, such as the financial advisors at Member Benefits.

Sometimes a little help goes a long way. If you’re looking for guidance on whether your portfolio aligns with your current goals, or if you want to explore your tolerance for risk, decide on investment objectives, determine your retirement expenses and income, or discover whether you’re on track for retirement, we have a service for you.

Visit our financial planning page to learn more about our financial planning service options, or email to get started.

Stay informed

No matter what your age, be sure to do your research and educate yourself using reliable resources. Member Benefits is an excellent place for retirement information. Visit our learning center to access articles, eBooks, calculators, informational brochures, an interactive budget worksheet, and more. And feel free to call us with your retirement questions at 1-800-279-4030.

Your recipe for retirement is personal and unique, just like Grandma’s special apple pie. If you pick up some tried and true ingredients and follow the recipe directions, you can accomplish your goals and create a satisfying retirement.

Your retirement recipe

  • Save early and save more when you can.
  • Use the personal savings options available to you. WRS and Social Security aren’t enough.
  • Determine whether your savings goals match your retirement goals.
  • Know all the fees you’re paying in your retirement savings accounts.
  • Be cautious about certain retirement products and “the free lunch.”
  • Don’t touch your retirement savings account until you retire if at all possible.
  • Prepare for the unexpected in retirement and build in some flexibility.
  • Consider working with a WEA Member Benefits financial advisor.
  • Keep learning from reliable resources like Member Benefits.

Considering a financial advisor?

Ask questions first. Learn more about how to begin your financial advisor search.