E*TRADE Seminar #1: Essential Steps for Planning a Secure Retirement

Yay! Today has finally arrived! It’s Retirement Education Day 2014!!! E*TRADE is hosting several web-based seminars throughout today and is discussing retirement related topics. I will be participating in all of them. And I am very excited.

Yes, I actually took a day off of work to do this.

And yes, I am that nerdy.

I’m sure all of the seminars will be very energetic and information filled. I will summarize the key points of each seminar and provide my thoughts on the material.

On to the first one! The first seminar is “Essential Steps for Planning a Secure Retirement.” It focused on 4 key steps.

  • Organize Your Financial Priorities
  • Take Ownership of Your Retirement
  • Calculate an Estimate of Your Retirement Outlook
  • Create & Execute Your Plan

Organize Your Financial Priorities

Jumping right into it, the presenter mentions paying off higher interest debt and building a liquid emergency fund (of 3-6 months of expenses) prior to starting a retirement savings.

Then, find out if your company has a retirement savings plan and if they match contributions. You definitely want to take advantage of this free money. Consider either a traditional IRA or Roth IRA for additional retirement savings options.

After you’ve started saving for retirement, you would then focus on funding education for your kids, paying off lower interest debt, and then paying off your mortgage.

Take Ownership of Your Retirement

After you’ve prioritized your financial plan, take ownership of your retirement. In this case, ownership means to get your hands around your retirement and take control of it.

The key action step here is to document your retirement goals. Some questions to consider are: When do you want to retire? What kind of lifestyle do you want in retirement? What is your risk tolerance level?

In addition to documenting your goals, of course, you want to document what you currently have in retirement savings as well as the rest of your financial assets.

Calculate an Estimate of Your Retirement Outlook

This is a straightforward step. Once you’ve prioritized your finances and established your goals, run calculations to see if your current plan is on track (or off target) for you to hit your retirement goals.

E*TRADE recommends its own Retirement Planning Calculator tool (of course!) to analyze how well you are doing.

Create & Execute Your Plan

Once you’ve run your calculations, you’ll find that you expect to have a shortfall or a surplus.

If you have a shortfall, you should consider changing some of your spending habits now, so that you can reach your retirement goals. The alternative, of course, is to reduce your standard of living during retirement.

Some other things to do include: increase your tax-deferred savings to retirement or consider delaying your retirement for a few years. You could also reevaluate your portfolio allocation, take on a little more risk, and (hopefully) get a better rate of return.

If you expect to have a surplus, then congratulations! But don’t get complacent. Continue to save and even increase your savings as necessary. You may even consider reducing your risk. You’ll get lower returns, but you may also sleep better at night.

Generally, you need to consider your health care expenses during retirement. And you need to be sure to have a solid estate plan in place. This may involve a will or trust (among other things), depending on your needs. If you have retirement savings accounts, always designate a beneficiary on these!

My Thoughts About This Seminar

This seminar was the first one and effectively was a 30-minute presentation to highlight and to setup the rest of the day.

Overall, the material was pretty good. Of course, there are some obvious things that I agree with: yes, you need to set financial goals and you need to prioritize them; yes, it’s good to understand where you stand with your finances; and yes, you should take action to make sure that you hit your goals.

There was really only one thing that I don’t personally agree with.

I am debt free (except for my mortgage), and I suggest you pay off all of your debt (again, except for a mortgage) prior to saving for retirement. I advocate paying off all your debt because you gain financial freedom. Saving lower interest debt for later (after investments) makes mathematical sense, but you are not financial free!

That said, is either strategy right or wrong? Well, no, no, no. If you have a plan in place, stick with it, and are intentional about implementing it, then either strategy will work out fine.


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