Steve Barreno has dedicated over 30 years to his career. Right from his first job, he began saving for retirement, gradually increasing his contributions as his salary grew.
Now 56, he has explored various strategies in the past few years to assess if his retirement plans remain on course.
“It gives me a sense of security to know I can retire,” stated Barreno, who holds an engineering degree. “If I don’t want to, I’m not working more than necessary.”
On the other hand, many Americans feel less secure about their retirement prospects than Barreno does.
Current retirement worries revolve around insufficient savings, inflation diminishing purchasing power, and declines in government assistance. A survey by Natixis Investment Managers polled 750 Americans earlier this year.
Despite the recent positive performance of the S&P 500, about 21% of those surveyed believe they’ll need a “miracle” to retire securely. Yet experts suggest that most individuals don’t need extraordinary solutions to feel more reassured about their retirement.
“They don’t need miracles; they need a solid plan,” emphasized Dave Goodsell, executive director of Natixis Investor Insight. “You really have to concentrate on what you’re doing, and be honest about your future expenses and lifestyle choices.”
A plan is essential.
“Investing all your assets together and following a plan is always the best approach,” noted Katie Klingensmith, chief investment strategist at Edelman Financial Engines, which provides asset planning and workplace investment advisory services.
It’s important to start saving early and remain consistent. Planning helps refine your retirement objectives and facilitates informed decisions aligned with those goals, including which accounts to use and how to allocate your investments.
Equally crucial is the necessity of reviewing your plans without making impulsive changes driven by emotions.
“Much of what takes place in the news and the economy doesn’t significantly alter the long-term wisdom of managing everything smartly and personally in the short term,” she added.
Creating a retirement plan
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When planning for retirement, various factors need consideration, including social security, pensions, anticipated income from personal savings, and lifestyle expenses. Utilizing software and consulting with financial advisors can be helpful.
“It’s quite a complex mathematical equation we present to individuals,” Goodsell commented.
Variables such as inflation, life expectancy, and investment returns can complicate planning. “This is where financial advisors play a crucial role,” he remarked.
The value of guidance extends beyond just proper asset allocation. “It’s also about emotional support” and “establishing trust-based relationships,” added Andy Reed, Vanguard’s director of behavioral economics and research.
Even as AI tools become more widespread, “it’s uncertain if conversing with a Gen AI chatbot will deliver the same emotional comfort as a human advisor can provide,” Reed pointed out.
Planning tools available on websites like Investor.gov, Boldin, and Empower assist individuals in understanding, tracking, and forecasting their financial situations to determine if they’re on the right path.
Using software tools does not have to replace professional advice. “A substantial portion of users (likely 15% or 20%) collaborate with an advisor. They often seek our tool for a second opinion,” shared Stephen Chen, founder and CEO of Boldin.
After thoroughly assessing various scenarios over the years, Barreno feels more optimistic about his retirement prospects. He’s not quite ready to retire yet, but “it’s an amazing feeling to know that if I want to, I can.”
