The story of retirement is changing due to new challenges that may affect your financial confidence. Traditional pensions are giving way to self-funded plans like 401(k)s, placing the responsibility for your financial future squarely on your shoulders. Market volatility, potential Social Security and tax changes, and increased life expectancies are all factors that add to your financial burden. It’s more important than ever to prepare diverse income streams and craft adaptable retirement strategies to ensure financial confidence in the face of these evolving challenges.

Adapting to Longer Life Expectancies

Modern medicine and healthier lifestyles mean we’re living longer. For men turning 65 last year, life expectancy is around 84 years, and for women, nearly 87 years. These averages mean many will live much longer, making a retirement income plan that accounts for a long life absolutely necessary.

Managing Healthcare and Long-Term-Care Costs

Around 70% of us will need some form of long-term care, and the coasts can be staggering. To address this, it’s critical to include the potential costs of healthcare and long-term-care into your retirement plan.

Diversifying Retirement Income Sources

Given that experts believe Social Security funds will run out by 2034 if no changes are made, it’s important to build retirement plans that don’t rely too heavily on Social Security. This means diversifying your retirement income sources. A comprehensive plan might include personal savings, investments, and income from annuities among other options.

The Impact of Stock Market Volatility

The stock market has always been unpredictable, but recent events like the COVID-19 pandemic have shown us just how volatile it can be. For retirees or those nearing retirement, market swings can be particularly troubling. Preparing for this volatility means having a diversified investment plan that’s custom-designed to suit your age, retirement timeline, and risk comfort level, ensuring your income isn’t overly dependent on the stock market’s ups and downs.

From Pensions to 401(k) “DIY” Plans

The shift from employer-provided pensions to self-directed retirement plans like 401(k)s has placed more of the responsibility on individuals. Without the steady income of a pension, many retirees rely on Social Security and personal savings. This shift means it’s more important than ever to have a clear retirement income plan that details when your income will start, how much you can expect, where it will come from, and how long it will last.

Tax Planning for the Future

Taxes could significantly impact your retirement, especially with the impending expiration of key provisions of the Tax Cuts and Jobs Act at the end of 2025. Higher tax rates will affect many retirees, particularly those on fixed incomes. A multi-year tax planning strategy that coordinates your income sources can help minimize the impact of tax changes over time.

Creating a Proactive Retirement Plan

Today’s retirement landscape demands a proactive mindset. Crafting a plan that acknowledges increased longevity, the shift from pensions to personal savings, the uncertainty of Social Security, and a potentially more volatile market is essential. By taking educated steps today, you can help ensure that your retirement story aligns with your future goals.

Your retirement journey may have changed course, but your ability to face these changes head-on has not. If this new adventure in your retirement planning seems overwhelming or confusing, remember you don’t have to navigate it alone. Our team of Financial Architects is here to help you design a plan that’s tailored to you and your needs. Call our office at (435)773-9444 or click here to schedule a complimentary consultation. Don’t let plotting a new course fill you with uncertainty. Reach out today, start a conversation, and let’s build the retirement of your dreams together.