When it comes to our retirement, we like to worry. Yet, you'd be surprised at how many people have never taken the time to truly assess the likelihood of their wealth lasting throughout their own lifetime. Here are six questions that you should be able to answer about your retirement.
1. How much are you going to spend in retirement? There are some experts who claim that you should use 70 percent of your pre-retirement salary as the number you need to withdraw from your nest egg each month. But every retiree may not need 70 percent. Do you save a good deal of your paycheck? Do you spend it all? Everybody is different and this number is extremely important. Spend a bit of time to figure out what you want to spend your money on after retirement.
2. Is your debt manageable? When there isn't a paycheck coming in every month your interest payments will affect your budget much more. How much extra money will you need to save to continue to pay down debt in retirement? It's a good idea to try to pay off as much debt as possible before retirement. Not needing to service any debt may make it easier to transition into a comfortable retirement.
3. Do you hold diversified investments? Ask yourself whether you have a good grasp of the investments you have purchased over the years. It's great to be able to name the percentage you should invest in bonds, but do you actually know what your own allocations are? Find out what your current asset allocation is and, if you need to, rebalance your investments.
4. Are you on track with your savings? This is the most common question that people ask and a question that needs to be looked at regularly. Set up a periodic review of whether you are saving enough.
5. Do you need a financial adviser? The answer is different for everyone. Some people are confident in their ability to invest while others could use a second opinion when the stock market is volatile. Though there are some bad apples in the crop of financial advisers, there are good ones as well. If you decide you need investment advice, it is your job to find a competent adviser. After all, this is your future and your retirement.
6. Will you leave money to heirs? For a lucky few an important question is not whether they will save enough for retirement but how their money should be handled if something happens to them. Ask yourself how you would like your money distributed to heirs. Do you want to put it in a trust, give the money directly to your children, or do you want to donate everything to charity? If you have a plan and the plan is being followed you probably won't worry about retirement as much.
David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.