Retirement Planning: A Balancing Act

In addition to fireworks and freedom, July marks National Retirement Planning Month, a time to evaluate your retirement plan, celebrate the progress you have made and develop any necessary adjustments to your savings. Our Spring 2019 Merrill Edge Report(1) found that Americans have positive feelings overall about their path to retirement – 80 percent are confident they will be able to retire at their target date.

However, our report also found that while many Americans are optimistic about their long-term financial plans, they are also overwhelmed by their finances in the short term, so much so that  their finances are impacting their mental and physical health (59 and 56 percent, respectively).

It’s important to learn how to balance saving for retirement and other financial goals with the responsibilities and joys of daily life. By creating a plan for the future that takes into account your retirement objectives, current expenses and short-term financial goals, such as saving for a vacation, Americans can alleviate some of their financial stress. To help achieve this balance, Merrill has a variety of tips to make saving for retirement a part of everyday budgeting.

Set a Retirement Goal

One of the biggest uncertainties when saving for retirement is not knowing how much to save. Experts recommend taking stock of current expenses, noting which will no longer be a factor upon retirement, like student loans; which might decrease in retirement; and which might increase, like travel. This exercise should provide a benchmark for the annual income needed in retirement and help identify a savings goal.

Explore Automated Investing Options

Using an automated investing option can also help. This can take the form of automatic paycheck contributions to a 401(k) or monthly transfers from a checking account to an investment account or IRA. Automatically earmarking a portion of your monthly income for retirement can also give you a more accurate picture of the money you have available for living expenses and other financial priorities.

Factor in an Inheritance

In addition to saving for their retirement, many Americans are interested in leaving money behind for their descendants, which should be factored into the overall total they are saving for the future. Our Merrill Edge Report found that nearly all Americans agree they want to leave money and other assets behind, including to their children (59 percent), spouse/partner (54 percent), siblings (17 percent), and nonprofits/charities (17 percent). However, 64 percent of respondents do not have a formal estate plan in place, including seniors (46 percent) and baby boomers (59 percent).   

Talk to a Professional

If making a retirement plan feels overwhelming or difficult to balance with other financial priorities, consider enlisting the help of a financial advisor. Our report found that 55 percent of respondents are currently turning to professional financial guidance, either in person or online, and two-thirds plan to do so in the future. There are a variety of options available for professional financial advice that can help you pursue your individual needs and goals.

Planning for retirement is an ongoing balancing act of managing current responsibilities and preparing for your future. By setting goals, regularly contributing toward your savings, and enlisting professional help when needed, you can develop a plan to help make your version of retirement a reality.

For more interesting findings from our latest Merrill Edge Report, visit merrilledge.com/report.

(1) Merrill Edge Survey Methodology

Concentrix (an independent market research company) conducted a nationally representative, panel-sample online survey on behalf of Merrill Edge April 17-May 9, 2019. The survey consisted of 1,000 mass affluent respondents throughout the U.S. Respondents in the study were defined as aged 18 to 23 (Gen Z) with investable assets between $50,000 and $250,000 or those aged 18 to 23 who have investable assets between $20,000 and $50,000 with an annual income of at least $50,000; or aged 24-plus with investable assets between $50,000 and $250,000. For this purpose, investable assets consist of the value of all cash, savings, mutual funds, CDs, IRAs, stocks, bonds and all other types of investments such as a 401(k), 403(B), and Roth IRA, but excluding primary home and other real estate investments. We conducted an oversampling of 300 mass affluents in Atlanta. The margin of error is +/- 3.1 percent for the national sample and about +/- 5.6 percent for the oversample market, reported at a 95 percent confidence level.

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