Top 8 Signs You Need To Revise Your Retirement Goals and Timeline
Written by
John Csiszar
Edited by
Renee Ross
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Retirement projections are a tricky thing. For the most part, the variables you’re dealing with are relatively unpredictable, and they’re usually spread out over a multi-decade timeframe. This can result in a wide variety of ultimate outcomes.
For example, if you invest $500 per month regularly from age 30 to age 60, your ultimate nest egg would be about $1.1 million if you earned 10% annually. But if you earn only 5% on average instead, your retirement account balance would only reach roughly $416,000.
That’s a huge difference. For this reason, it’s imperative that you review your retirement plan regularly and make adjustments along the way to your retirement goals and timeline.
But there are other signs that you may need to make changes to your retirement planning as well, both positive and negative. Here are some of the most common.
Negative Adjustments
A successful retirement plan takes diligent planning and saving. Unfortunately, there are a lot of variables that can upset things along the way. If you find that you’re in any of these situations, you may need to make some changes to your retirement timeline and expectations.
Your Retirement Account Projections Aren’t Where You Want Them To Be
The most obvious reason for making adjustments is if your retirement account projections are coming up short. Any number of online calculators will allow you to plug in your current balance, the amount you’re saving and your expected return to show your estimated nest egg.
While there’s no way to accurately predict your expected return, you can use historical averages to make estimates. These calculators can be invaluable to giving you a heads up if you’re falling behind where you want to be.
Your Social Security Will Be Insufficient
The Social Security Administration provides extensive information about your Social Security benefits on its website. Using your actual work history and projected future earnings, the SSA will show you what your benefit is expected to be at any age from 62 to 70.
If you see that you won’t be earning enough to replace or supplement your lost income in retirement, start devising a Social Security strategy that will boost your benefits. There are two ways that you can do this: increase your income or delay your claiming age.
Your Income Has Fallen
Most workers anticipate that their income will increase over the course of their careers, but in some instances, this just isn’t the case. If you’ve earned $80,000 per year on average over the course of your career but are now earning just $60,000, for example, you might have to adjust your retirement goals and timeline downwards.
If, on the other hand, you’re determined to still meet your original retirement goals, you may have to either work for additional years or search for a higher-paying job.
You’ve Had a Life Setback
Unfortunately, sometimes even if you’ve done all the hard work to reach your goals, unexpected setbacks can derail your plans. Some of life’s tragedies that can upset financial plans include divorce, serious illness, a death in the family or even identity theft.
Whenever you encounter a disruption to your financial life, it’s time to review your retirement goals and timeline and see if you need to make any adjustments.
Positive Adjustments
Fortunately, not all life events have negative repercussions on your finances. In some cases, unexpected occurrences can actually boost your financial situation. Here are some instances in which you might actually be able to revise your retirement goals and timeline for the better.
You’ve Moved to a More Affordable Area
One of the easiest ways to boost your long-term financial profile is to simply move to a more affordable area. If you can save a few hundred or thousand dollars each month on your basic necessities, you can likely either move up your retirement date or improve your quality of life, all without having to get a higher-paying job or trim your expenses.
You’ve Received a Windfall
According to a report by Cerulli Associates, more than $84 trillion will pass to heirs through 2045. Receiving a sizable inheritance can have a significant effect on your retirement goals and timeline.
If you save or invest the money rather than spending it, you can likely retire sooner than you originally planned. If you choose to stick with your original retirement date, your windfall can either enhance your quality of life or extend the number of years you’ll have before you potentially outlive your money.
Your Investments Have Outperformed
Whether through luck or prudent planning, if your investments have outperformed your expectations, you may be able to revise your retirement planning for the better. As the example in the introduction shows, successful investing can more than double the size of your retirement nest egg, with obviously positive ramifications.
This is why it’s important to review your portfolio allocation and performance regularly, so you can make any needed adjustments as you go.
You’ve Changed Your Lifestyle
Few people maintain the same standard of living over the course of their entire working careers. In many cases, “lifestyle creep” tends to raise spending levels in line with rising incomes. But if you’ve managed to control your expenses and now live comfortably within your means, you might not need as large a retirement nest egg as you originally planned.
You may also be able to boost your investment contributions to provide even more of a financial cushion once you retire.
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