Steve Baleno has been in the workforce for more than 30 years. He started saving for retirement with his first job, and boosted his savings each year as his salary increased.
Now at age 56, he’s run different scenarios over the last few years to see if his retirement plan is on track.
“It gives me the security to know I could retire,” said Baleno, who has a degree in engineering. “I’m not working longer than I need to, if I don’t want to.”
Many Americans are not as confident as Baleno in their ability to retire securely.
Top retirement concerns include not saving enough, inflation eating away at savings and cuts to government benefits, according to a new Natixis Investment Managers survey. The firm polled 750 Americans earlier this year.
While the recent performance of the S&P 500 has raised Americans’ optimism, 21% of the survey respondents still say it will “take a miracle” to retire securely. Yet experts say most people don’t need something extraordinary to happen to feel more secure about retirement.
“They don’t need a miracle, they need a plan,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight. “You really gotta focus in on what you’re doing and be honest about what your future cost might be, what kind of lifestyle you’re going to have.”
A plan is ‘always the right answer’
“It is always the right answer to put all of the assets together and invest them according to a plan,” said Katie Klingensmith, chief investment strategist at Edelman Financial Engines, a wealth planning and workplace investment advisory firm.
It’s also important to review your plan, and not make changes based on emotions.
“Most of what happens in the news and in the economy short term will not have a material impact on the long-term wisdom of deploying everything in a way that is sensible and personal,” she said.
How to create a plan for retirement
Dekiart | E+ | Getty Images
There’s a lot to consider when planning for retirement, including expected income from Social Security, pensions and personal savings, as well as lifestyle expenses. You might enlist help from software and other tools, as well as a financial advisor.
“This is a super complicated mathematical equation we give people,” said Goodsell.
Inflation, longevity and return variables can make it challenging to plan. “That’s where a financial advisor, I think, comes into the equation,” he said.
The value of advice is more than the right asset allocation mix. “It’s also the emotional value” and “building that relationship with a trusted person,” said Andy Reed, head of behavioral economics and research at Vanguard.
Even as artificial intelligence tools become more ubiquitous, “it’s not clear that talking to a Gen AI chatbot will deliver the same type of emotional value that a human advisor could,” said Reed.
Planning tools from sites like investor.gov, Boldin and Empower can also help people understand, track and forecast their finances to check if they are on target.
Software planning tools and professional advice don’t have to be mutually exclusive. “A big chunk of our users — probably 15% or 20% — have advisors, and they’ll share the plan they created with us with their advisor, and they just use it as a second opinion,” said Stephen Chen, founder and CEO of Boldin.
After sticking with his plan over the years and comparing different scenarios, Baleno feels good about his likelihood of a successful retirement. He’s not ready to retire, yet, “but understanding I could retire if I chose to is a great feeling.”
SIGN UP: Money 101 is an 8-week learning course on financial freedom, delivered weekly to your inbox. Sign up here. It is also available in Spanish.
