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Retirement Planning 101: The First Steps You Should Take 

Admin • December 1, 2023

Have you ever been up against a really tough challenge? Not the kind of challenge that’s overly complicated, physically demanding, or seemingly unattainable — the kind that demands a shift in your habits and maybe even the dismantling of mental barriers to progress to the next level.

Your mind may naturally wander to things like maintaining a healthy diet or sticking to a gym routine. However, if you sit with this question, your thoughts may gravitate towards other unquestionably essential things, such as planning for retirement.

Think about it: opening up a retirement account or setting up automatic contributions, the very basics of preparing for retirement, isn’t all that challenging. Yet, many of us find excuses to put it off for another day.

“I’ll start saving when I make more money.”

“Who knows what tomorrow holds? I’m living life on my terms now, and I’ll deal with retirement later.”

“It all feels overwhelming, and I have no clue where to start.”

While those thoughts may hold some validity, they often become excuses to procrastinate on planning for something that will inevitably come. Even if we delay retirement or opt to work part-time during retirement, the fact remains that a time will come when we are no longer physically or mentally fit for employment, and the time to prepare for that day is now .

Steps in Retirement Planning

So, where do you start if the enormity of it all feels too much to handle? Fortunately, taking small steps is not only allowed but encouraged. And if you’re asking, “What are the first steps of retirement planning?” —we’ve got you covered with four steps you can start taking today! 

1. Define What Retirement Means to You

If you’re in the early stages of your career, it’s natural for your retirement goals to shift many times before you retire. However, even if you don’t have all the answers, it’s still important to think about what retirement means to you right now.

For some, retirement might mean achieving a work-optional lifestyle, meaning they have the flexibility to retire by a certain age, even if they intend to continue working because they genuinely love their work. Others may aim for a more definitive retirement age, at which point they focus on a passion project or volunteering their time.

Here are a few questions to help you start thinking about what retirement means to you:

  • What’s your ideal retirement age? ( Hint: It doesn’t have to be the traditional age of 65. You’re allowed to dream while still staying grounded in reality.)
  • Where do you want to live? Do you want to stay put, move to a tax-friendly state, or move abroad for a lower cost of living?
  • Do you have a passion project in mind, like launching a non-profit or turning your hobby into a business that you can hand down to the next generations?

Remember, it’s okay if your goals evolve with you. It’s better to adjust your goals as your circumstances and dreams change rather than do nothing because you have no vision for the future.

2. Estimate Your Anticipated Expenses

This step in retirement planning can feel hazy, given the many variables that can change between now and retirement. However, a practical starting point is assessing your current spending.

Make a list of your current expenses and determine which ones you’ll realistically maintain in retirement and which you won’t, or which might increase or decrease in retirement. Remember to factor in inflation, medical expenses, and some things you aspire to do in retirement.

Here are some questions to inspire your imagination about what you might want and need to budget for in retirement:

  • What are some things you want to experience in retirement? For example, do you plan to travel extensively while you’re still in good health?
  • Is there someone or something you’d like to financially support, such as an organization close to your heart or your grandchildren?
  • Is there anyone who would be able and willing to take you in if there comes a time when living independently becomes challenging, or do you envision a scenario where you might require care in a nursing home?

Depending on where you are in life right now, it might be too soon to have a solid answer to some of these questions. However, they are meant to get you thinking about how you may want and need to manage your finances during retirement. 

3. Assess Your Current Financial Situation

This step may be challenging because we’re shifting the focus from dreaming about what’s possible to facing reality. However hard it may be, you need to clearly understand where you are today to plan for where you want to go.

To gauge your retirement readiness, you can start with these steps:

  • List all your retirement accounts, including their respective balances and ongoing contributions.  

This list should include everything from employer-sponsored plans like a 401(k), self-employed retirement plans such as a Solo 401(k) or SEP IRA, personal retirement accounts like IRAs, and even non-retirement accounts that you’ve earmarked for retirement, like investment or savings accounts.

  • Review your investment portfolio to ensure it aligns with your age, risk tolerance, and goals. 

Some mistakenly believe they’ve covered all the bases by simply contributing to a retirement account, but there’s more to it. While retirement accounts offer tax advantages, if your retirement funds are parked in cash, your returns won’t be much different than leaving your cash in a savings account earning a meager 0.3%.

A more aggressive approach to investing is typically suitable when you’re younger because you have more time to take risks for greater rewards and recover from market setbacks. As you approach retirement age, a conservative approach may be better to preserve your wealth. 

Once you know where you stand, you can take the proper steps to move the needle in the right direction.

4. Determine What Changes Are Needed and Take Action

This step involves some number crunching to determine if you’re on the right track and, if not, how to bridge the gap. While a more in-depth approach may be required, there are many online calculators that allow you to plug in some basic data to get a general idea of your retirement readiness.

In addition to solving for your required contributions and rate of return to meet your goals, you may need to make other changes. For instance, you may need to set up or enroll in a retirement plan.

If you’re employed, start by reviewing your benefits to see what option(s) are available to you; if you’re self-employed, start comparing the various plans available to business owners to determine which best meets your business needs.

Once you’re clear on what needs to be done and you have the means to do it (even if it involves trimming some of your discretionary spending), it’s time to take action. 

Enroll in your employer’s 401(k) plan. Boost your contributions to secure the full employer match. Automate savings to your investment account. There’s no universal guide to retirement, so do what’s necessary and attainable for your circumstances.

Your Retirement Life by Design: Piecing It All Together

While we encourage you to work through these exercises individually, merging all the steps in retirement planning into a comprehensive and well-defined strategy can be challenging.  

The good news is, much like there are specialists for handling your taxes or repairing things around your home, there are retirement planning specialists , too. Retirement planning specialists like the team at Five Pine Wealth can help you develop a clear roadmap with steps in retirement planning to help you achieve your vision.

If the idea of planning for retirement feels daunting, we’d love to chat with you to see if we’re a good fit. Give us a call at 877.333.1015 or send us an email at info@fivepinewealth.com .

At this time, we’re welcoming clients in Spokane and across the nation through our virtual retirement planning services .  Remember, whether you do this independently or opt to team up with a trusted advisor , taking even small steps is far more valuable than taking no action at all.

Preparing for Retirement Without Compromising Today: Savings Strategies for Your 50s

February 21, 2025
Somewhere in adulthood, the old question of “What do you want to be when you grow up?” morphs into “ What do you want to do when you retire?” Some people dream about their retirement for decades, while others barely give it a thought. Either way, by the time you reach your 50s, you’ll benefit from building a retirement plan that doesn’t force you to sacrifice all of life’s joys today. Retirement planning in your 50s is less about radical changes and more about making intelligent, intentional decisions. Let’s dive in. By your 50s, you’ve likely hit your peak earning years. That’s the good news. The not-so-great news? The clock is ticking on the years left to build your nest egg. Don’t panic. With a strategic approach, you can set yourself up for a secure retirement without feeling like you’re putting life on pause. Your 50s are also a time to reassess priorities. Kids might be leaving the house (goodbye, endless grocery bills!), and you might have more flexibility in allocating your income. This decade is the perfect opportunity to course-correct and make up for any lost time. 4 Retirement Savings Strategies for Your 50s This decade is the perfect time to implement strategies that will help you coast right into your golden years. 1. Max Out Retirement Accounts The IRS gives a little extra love to folks 50 and over in the form of catch-up contributions. For 2024, you can contribute up to $30,500 to your 401(k) ($23,000 plus a $7,500 catch-up contribution). Don’t have a 401(k)? No problem. With an IRA, you can add an extra $1,000 to the usual $7000 contribution limit. These boosts may seem small, but they add up fast, especially with compounding returns working their magic. 2. Automate Your Savings Automating contributions ensures you’re consistently saving without even thinking about it. Set up direct deposits into your retirement accounts so saving becomes as effortless as your morning coffee routine. If you get a raise, consider earmarking most of it for your savings—future you will thank you. 3. Diversify Investments By now, you’ve likely heard that “diversification” is key, but what does it mean for you? In your 50s, you’re likely transitioning from a more aggressive portfolio to a slightly more conservative one. That doesn’t mean selling all your stocks and parking your money in bonds, but rather finding a balance that aligns with your risk tolerance and timeline. 4. Pay Down High-Interest Debt Interest rates on credit cards or other high-interest loans can drain funds that could otherwise be growing in retirement accounts. Paying these off first will free up cash flow for savings. Catching Up on Retirement Savings If you’re behind on retirement savings, don’t stress. There are plenty of ways to catch up while still enjoying life today: Reevaluate Your Budget : Start by taking a close look at where your money is going. Are there subscriptions you’ve forgotten about? Could dining out be scaled back slightly? You don’t have to eliminate all your “wants”—just trim the fat. Even reallocating $200 a month can lead to significant savings over time. Downsize Strategically : Empty nesters, this one’s for you. If your current home has more space than you need, downsizing could free up substantial equity for retirement savings. Smaller homes also mean lower utility bills, maintenance costs, and property taxes. Leverage Catch-Up Contributions : As mentioned earlier, these higher contribution limits for people over 50 are a game-changer. Pair this with any employer-matching contributions, and you’ve got a recipe for rapid savings growth. Delay Social Security : While Social Security might feel like a safety net, waiting to claim it can significantly increase your benefits. Your benefits grow every year you delay claiming beyond your full retirement age (up to 70). If you can, let those checks wait while your investments continue to work. Explore Additional Income Streams : Retirement doesn’t have to mean quitting work entirely. Many people in their 50s find side hustles or part-time work that aligns with their interests. Whether it’s consulting, teaching, or turning a hobby into income, these earnings can supplement savings without feeling like a burden. Balancing Retirement Planning with Enjoying Today Now for the part everyone cares about: How do you plan for tomorrow without ruining today? Here’s how to strike the balance: Set Clear Goals What does retirement look like for you? Is it traveling the world, spending more time with family, or pursuing hobbies you love? Knowing your “why” helps make the sacrifices feel worthwhile. It also gives you a clearer target to aim for. Embrace Experiences Over Things Research shows that spending on experiences—like vacations, concerts, or classes—provides longer-lasting happiness than material goods. Plus, experiences don’t have to break the bank. Look for ways to create memories without overspending. Plan for Mini-Retirements Who says you have to wait until you’re 65 to enjoy some of that freedom? Consider taking shorter breaks or extended vacations now to recharge and enjoy life. With careful planning, these “mini-retirements” won’t derail your long-term goals. Prioritize Health One of the best investments you can make in your future is in your health. Regular exercise, a balanced diet, and preventive healthcare can reduce medical expenses down the road and ensure you can fully enjoy your retirement. Celebrate Small Wins Saving for retirement is a marathon, not a sprint. Celebrate progress along the way—whether it’s maxing out your 401(k) for the first time or finally paying off that lingering debt. 3 Practical Action Steps to Get Started Calculate Your Retirement Needs : Estimate how much you’ll need to maintain your desired lifestyle. Don’t forget to factor in healthcare costs, home maintenance, inflation, and leisure activities. Review Insurance Coverage : Make sure you’re adequately covered with health, life, and long-term care insurance. These policies can protect your savings from unexpected expenses. Adjust Your Asset Allocation : As you approach retirement, consider shifting some of your investments into more stable options. This will minimize the risk of major losses as you approach the time when you will need the money. How Five Pine Wealth Management Can Help We can help you create a tailored plan, taking into account your current savings, goals, and timeline. With our experience, we can advise you on maximizing tax-advantaged accounts and minimizing unnecessary risks. Preparing for retirement in your 50s doesn’t mean sacrificing today’s joys. With thoughtful planning, strategic savings, and a focus on balance, you can enjoy the present while setting yourself up for a comfortable future. Start today, by scheduling a meeting with us. Email info@fivepinewealth.com or call us at: 877.333.1015 to take it one step at a time, and remember: It’s never too late to build the retirement you deserve.

Robo Advisor vs Financial Advisor: Why Automation Can’t Beat the Human Touch

February 14, 2025
In today's fast-paced and tech-driven world, convenience is a hot commodity. Businesses across industries have had to pivot to meet the demands of consumers who crave efficiency and ease. Think about how brick-and-mortar retailers have transformed into online shopping havens with a greatly increased selection of products, the ease of shopping at all hours from home, or how delivery services have boomed as an effortless solution to mealtime dilemmas, to name a few. If businesses don't prioritize easy accessibility and simplicity, many risk losing consumers. The finance industry is no exception — in fact, it's a prime example of an industry constantly innovating to simplify highly sought-after services like investing. Case in point? Robo-advisors. What Is a Robo-Advisor? If you're unfamiliar with the term, you could likely guess its meaning from the name alone. More officially, it refers to a software application that provides automated, algorithm-driven investment management with minimal human intervention. These platforms leverage technology to streamline and optimize the investment process. They typically offer a curated selection of investment options tailored to an investor's goals, risk tolerance, and time horizon. An automated solution for building wealth? Sounds promising! But while it might seem like an all-good, no-bad, very-welcomed shift in the industry, it's important to remember that with the positives may come some serious drawbacks. Let's explore both sides: robo advisor pros and cons. Robo-Advisor Pros First off, let's highlight the positives. A big one is that many individuals who had never even considered investing before might still be in the same position today if it weren't for accessible solutions like robo-advisors. They have opened doors for countless people to enter the world of investing, which is exciting! But let's look at a few other benefits that have fueled their increasing popularity: Accessibility and Convenience: These are two key factors that influence consumer satisfaction, and robo-advisors deliver precisely that. They are easily accessible online or through mobile apps. Their user-friendly interfaces make it easy for investors to open an account and set up automated contributions within minutes, monitor their investments, and make adjustments — all without the need for face-to-face meetings or phone calls with a financial advisor. Automatic Diversification: If you're new to investing or have limited knowledge, robo-advisors alleviate the stress of deciding how to invest. Using sophisticated algorithms, they offer diversified investment portfolios based on your risk tolerance, investment goals, and how soon you may need to access your invested money. This approach can effectively mitigate risk and minimize the impact of market volatility on investment returns. Low Cost: Robo-advisors usually come with lower fees than traditional financial advisors who actively manage your portfolio. Through automation and technology, these platforms can offer their services at a lower cost, making investment management more accessible to a broader range of investors, including those with smaller portfolios. These benefits are precisely what many investors are seeking as they begin their investing journey, positioning robo-advisors as a solution for some. Robo-Advisor Cons While robo-advisors have gained popularity for their evident and understandable benefits, it's essential to acknowledge that every innovation or advancement often has accompanying drawbacks. Let's explore some of them: No Human Touch: Finances are deeply personal. Beyond mere math, financial decisions are often emotionally driven. While a robo-advisor can efficiently manage your investments using algorithms and automation, it can't engage in comforting conversations or provide reassurance during turbulent market conditions to prevent impulse decisions driven by fear or uncertainty. Nor can it offer encouragement to keep going or remind you of your progress in your financial journey when times get tough. Sometimes, human interaction and guidance are indispensable. Limited Customization: Robo-advisors typically offer a selection of pre-built portfolios made up of ETFs (exchange-traded funds) or mutual funds. While these portfolios provide diversification that suits many investors, they're not a perfect fit for everyone. Take, for example, an investor with specific preferences, like avoiding certain companies or industries or desiring to invest in individual stocks. In such cases, robo-advisors might be too restrictive. Additionally, robo-advisors might not have the capacity to deal with more complex financial situations, such as tax optimization or retirement income planning for high-net-worth individuals. Limited Area of Focus: While the allure of robo-advisors partially lies in their simplicity, that can equally be a drawback. Because robo-advisors primarily focus on investment management, you might miss out on the holistic approach of a human financial advisor who considers various aspects of your financial situation. A robo-advisor doesn't consider factors like high-interest debt you may have, for example, which might be wiser to pay down before aggressively investing. Nor does it account for the possibility of not having an adequate emergency fund or other pressing financial obligations that take priority. When it comes to investing, having a financial advisor looking at your entire financial landscape can provide valuable insights into the most suitable account types to open, ideal contribution amounts, and the target rate of return to aim for. These drawbacks highlight the importance of understanding the limitations of a robo advisor vs. a financial advisor and considering them in the context of your financial goals, preferences, and circumstances. Robo Advisors vs. Financial Advisors: How Five Pine Wealth Management Can Add a Personal Touch to Your Finances  The balance between the positive and negative aspects is a common challenge of many new technologies, robo-advisors included. As with any financial decision, investors should thoughtfully evaluate their individual needs and preferences before opting for these platforms. As you might be able to guess, we here at Five Pine Wealth Management place immense value on the personal touch and genuine passion of a human financial advisor. It's the driving force behind everything we do. We believe in understanding your circumstances, empathizing with your concerns, building a long-lasting relationship, and providing personalized guidance for each client. While we can recognize the advantages of robo-advisors, we can't ignore the fact that they can't replicate the human element in financial planning. The relationship with a financial advisor goes beyond mere numbers. And if that's what you're looking for, we'd love to chat! Contact us at info@fivepinewealth.com or 877.333.1015 to schedule a meeting.
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