No one wants financial stresses in Retirement!  Here are three things that I believe you need to do in order to make your retirement years financially stress free.

1. Payoff your mortgage – With rates today so low, there is no argument that from a financial standpoint you are better off NOT paying down your mortgage early.  BUT…This only works if you are disciplined enough to invest the money you would have used to pay down the mortgage.  In my experience, people are less disciplined in paying themselves than they are paying bills. Things come up over time and they either stop investing or they dip into the investment account.  To make staying on track easier, I would suggest three things.  First, if you haven’t already done so, set up your payment to be automatically drafted from your bank account.  Second, set up your payment bi-weekly (this alone could have you mortgage free 5 years earlier).  You will have to check with your lender, if the loan only compounds monthly this won’t work.  Interest must be compounded daily or be compounded monthly based on the average balance of that month.  Last, figure out how much extra you would have to pay towards principal each payment to have your mortgage paid off at retirement.  Then set up your automated payment to include the increased principal payment.  Not all decisions are financial. The feeling of being mortgage free and eliminating, in most cases, the largest month-to-month bill can far outweigh the perceived financial benefit of having a mortgage and put a lot less stress on your retirement savings.

2. Have a Pension – Rule of thumb…at least 60% of your basic expenses during retirement should be covered by guaranteed income. Problem is pension plans are largely extinct today and 20 years from now Social Security may not exist in the same form we know it today.  Volatile stock markets and low interest rates made pension plans very expensive for private businesses.  Most employers have converted to 401(k) plans, which in turn, put the expense and risk of saving for retirement in the laps of their employees.  If you are like most of us and don’t have a pension through work, you should look into insurance programs that can provide a guaranteed* income stream.  There is a world of options available and no plan is perfect for every situation.  Having a guaranteed income stream may help take the stress out of watching the markets and wondering if you are going to outlive your assets.

3. Get a Financial Plan – Going through the process of having a financial plan done is maybe the most important step towards retirement. It provides a road map to retirement, will identify any gaps or potential red flags, and assist in making sure any unforeseen life events don’t throw your plan off the cliff.  At the very least it will help you work toward a financially stress free retirement.

Be clever with your benjamins, follow these steps and your chances of maintaining your pre-retirement lifestyle will become much easier.

Written by:  Brad Kaplan

Request a FREE consulation: www.kaplanwealth.com

*Guarantees are based on the claims paying ability of the issuing company.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal. No strategy assures success or protects against loss.

The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states:MD, MI, NJ, NC, PA, VA, WV