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retired coupleDo you have a Plan B for when you retire? Life is full of surprises. You’ve spent decades planning and saving for retirement. You saved for retirement by faithfully putting money into a plan such as a 401K or IRA. Many people wonder if it will be enough. What will your retirement savings be when you are ready to retire? Will it be enough for what you need? Do you have the right plan? These and other questions are great starters for thinking about having a Plan B for retirement.

3 Reasons You Need a Plan B

Life is not perfect.

Unfortunately, things happen that are beyond your control. These affect your retirement plans. You could lose your job, have a major-medical issue, get a divorce, or lose savings from a market crash. The Great Recession of 2008 saw many investment accounts, including those for retirement, plunge. This left retirees and those close to retiring without the funds they were relying on. People lost their jobs that stopped the flow of positive investments. And if you’ve experienced anything like a divorce, your retirement savings could have been cut in half.

You’ve experienced income creep.

If you have a salary that has continuously gotten bigger as you age, you’ve most likely adjusted to the lifestyle that matches that salary. The term is called income creep, and it could be difficult to maintain into retirement. In addition, you might be surprised to learn that your payments from your retirement savings, pension plans, and social security will be a lot less than the salary you’ve become so accustomed to getting. While you might think that you won’t need that same annual income when you retire, you have your habits that are hard to break. Be realistic. You have a standard of living to maintain that needs a strategy and a backup plan.

You are more likely to live longer.

Times have changed when it comes to thinking about retirement. A decade or two ago, people thought about retirement as the end of their life in terms of only so many years. Today’s retirees can expect to live another 20 to 30 years. That’s about the same amount of time you spent in your working career. How much will you need so you don’t run out of money? One current estimation from a formula by Fidelity indicates you need about eight times your final salary at retirement.

By creating a Plan B, you can better ensure you will be able to retire safely and securely. You can reduce your risk by not putting all your eggs in one basket. If you want to learn more about creating alternate plans or want to evaluate your current plan, contact Reagan Financial Planning.

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