Retirement role models

Last week I looked at the recently released Voya Retire Ready Index report and what it said about where retirees and pre-retirees were when it came to retirement readiness. Today we glean from those who seem to be the most prepared how they did it. The report calls these folks Role Models. (The report is online at go.voya.com/IndexReport if you would like to read it yourself.)

The current workers who were feeling the best about their chances of a successful retirement took time to think about what they wanted and were making plans. They looked at the type of lifestyle they wanted to live and when they wanted to retire. They determined if their savings would meet their future needs (including healthcare costs) and made an appropriate savings goal.

These role models also got help. They were more than twice as likely as the average folks to meet with an adviser or get guidance over the phone. They also used the Internet and the myriad of tools available there. In other words, they didn’t just guess as to their ability to retire.

They didn’t just plan, they acted. Role models were more likely to max out their 401(k) plan or at least put in the full amount their employer would match. They paid more attention to their investments, and rebalanced them more frequently. (Regular readers of this column know how much I like the concept of rebalancing your portfolios periodically.)

Examining role model retirees yielded more clues about what can give you greater confidence in your retirement. To emulate them you would need to start your savings program early in your career, then stick to a budget and a plan based on what your retirement needs will be (they tended to have a pretty good idea of that early, too).

Of course Voya, being in the insurance business, tended to give higher grades to those who used insurance products and investment vehicles that are more retail-oriented. Nevertheless, the results seem clear (at least to me): Plan, learn, save, pay attention.

Other studies seem to indicate that a lot of these traits may be in your DNA. Some folks are just better at preparing for the future than others. While that may be true, if this doesn’t come naturally to you, you still need to do it. Here are some ideas:

Determine what it will take to have a comfortable retirement. The easiest way to do that is to take your current spending, adjust it to reflect what retirement will look like for you, and then subtract from that the pension and Social Security income you’ll receive.

Go online and run one of the many financial calculators that will ask you how much you have now, what income you’ll need in the future, and then play with it to see what your monthly spending and needed investment returns will be.

Then start saving.

If this seems too complicated for you, get help.

Yes, this is all easier said than done, but aren’t you worth it?

This article was published under the title "Follow lead of retirement exemplars" in the Wichita Falls Times Record News on May 10, 2015.