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Planning for a Secure Financial Future: It’s Not Too Early to Start
By Corporate Relations and Business Strategy Staff
As you navigate through your career journey, whether you're preparing to retire soon or are in the middle of building your practice, it's crucial to start planning ahead for financial security. Psychologists often face challenges due to lengthy trning periods, high student loan payments, and the significant time commitment required to establish and manage a practice. However, with some strategic preparation, you can ensure a financially stable future.
The Planning Process
Begin by envisioning your desired lifestyle in retirement:
Would you like to gradually decrease your workload?
Would you prefer part-time client engagement?
Do you see yourself mntning only supervision or consultation aspects of your practice?
Are you contemplating starting a second career or exploring new business opportunities?
Or, are you considering retiring altogether while keeping the option open to work as long as you wish?
Reflect on these factors and others such as travel plans, potential home adjustments, and any relocation considerations.
Review Your Present Financial Situation
An in-depth assessment of your current finances will provide clarity on what lies ahead. You should:
Calculate your net worth total assets minus total liabilities.
Organize expenses to understand sping patterns.
Evaluate retirement accounts and investments.
Personal financial software tools like Quicken or Money can simplify these processes for you.
Determine Your Retirement Needs
Consult with a financial planner to calculate how much income you will need during retirement. Consider:
The percentage of your pre-retirement annual income needed in retirement
When you m to retire.
Expected investment returns and potential inflation rates.
Tax implications on investments.
Together, establish a personalized plan your retirement aspirations and ensures sustnability. Implement concrete steps and remn committed to the plan over time.
Review Your Plan Regularly
As circumstances change or new ideas arise about your future, it's crucial to adjust your retirement plans accordingly. Yearly or bi-annual reviews in collaboration with your financial advisor are recommed for keeping your strategy on track toward achieving your goals.
Financial Considerations
Learn about Saving for Retirement
Gning knowledge through books and reputable financial websites such as CNN Money?and MSN Money can provide a solid foundation without requiring expertise. This understanding will facilitate discussions with your financial advisor and make you more comfortable throughout .
Choose the Right Retirement Savings Vehicle
There are various options to consider, including 401ks, Keogh plans, IRAs Traditional or Roth, and SIMPLE IRAs. Each has unique features like eligibility requirements, investment risks, return expectations, access to funds, and tax implications. Your financial advisor can help you identify the most suitable option based on your legal practice model.
Explore Other Sources of Income
During retirement, additional income sources may include Social Security benefits, revenue from part-time work, or investments outside retirement accounts like stocks and bonds. Reviewing your Social Security Statement for projected benefits is a good practice.
Plan for Unanticipated Expenses
Inflation can impact the financial needs even in retirement. Build an emergency fund that provides quick access to funds for unexpected expenses such as home reprs or medical emergencies.
Other Financial Issues
Retirement planning encompasses more than investments; consider insurance strategies with your advisor, including:
Wills and trusts
Health, disability, and life insurance policies.
Long-term care insurance if anticipated needs exceed government programs' coverage.
Ensure you're covered by malpractice liability insurance until the of patient care.
Five Tips for Getting Started
can be daunting. David Ballard, PsyD, MBA, suggests these five steps to ease your journey:
Focus on planning ahead.
Begin saving as soon as possible.
Consult with a financial advisor regularly.
Develop and stick to your retirement plan.
Secure yourself and your family by obtning appropriate insurance.
By taking proactive measures now, you'll enhance your confidence in achieving financial stability during your golden years.
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