The best way to save for retirement does not involve a singular approach or strategy. Diversification is important, as is starting your savings accounts as early as possible. It is also important to do as much self-conducted research as possible, while also taking advise from professional financial advisors.
You might have one financial advisor you know well and trust. Similar to doctors when they diagnose a serious illness, however, it cannot hurt to get a second opinion. Additionally, professional financial advisors have the training, knowledge and experience to make the most out of your money for you.
Yes, certain fees are involved when hiring a financial advisor. What needs to be weighed out is whether you are capable of saving as much retirement money on your own as you are with the help of a trusted financial professional. If the retirement money you might save with the help of a financial advisor is significantly more than what you could save on your own, then the answer is a resounding “yes.”
Even before hiring a financial advisor, perhaps the single most important factor pursuant to saving for retirement is self-awareness of your retirement wants, needs and goals. This process begins in your younger years and continues throughout the time you spend in the workforce. Your wants, needs and goals might change as each decade goes by as well, so it is advisable to combine self-knowledge with flexibility and adaptability.
Begin by deciding what type of lifestyle you want to live during retirement and work backwards. This includes goals for traveling, possessions, location and freedom from all financial worry and stress. If you are comfortable with a simple lifestyle, you might need less retirement savings. If you are more prone to living a lavish lifestyle, with goals of owning a yacht, vacation homes and travel you will likely need to save more.
Your family goals are also an integral part of saving for your retirement. Do you plan to have children? If so, how many and what education goals will you instill upon them? You also need to factor in your end-of-life needs.
Many people choose to save enough to pay for funerals, out-of-pocket medical expanse and long-term care facility needs in addition to general retirement needs. Retirement calculators help you factor in all these elements and more so you can make the best retirement-based savings and investing decisions possible.
In addition to building your retirement savings, financial advisors help manage your debt both in advance and after you acquire it. Saving, investing, and managing debt all help you calculate retirement savings with the utmost amount of knowledge and prioritization of your goals.
Financial advisors teach strategies for investing and diversifying your retirement portfolio to maximize your savings and minimize the taxes you are required to pay. Ultimately, the most effective savings and investing strategies begin with knowing your goals and making plans to achieve them in logical, attainable steps each year.