Four steps toward having a confident retirement

The road to retirement is full of twists and turns that can make even the most financially secure person wonder if they saved enough for their next chapter. If you feel similar emotions, know you are not alone. Breaking down your retirement savings into four distinct components can help take the uncertainty out of planning for your financial future.

Cover the essentials: A fundamental step is to make sure your essential expenses are covered in retirement. These include mortgage payments, groceries, utilities, transportation, insurance and other items that keep your life running. A good way to handle these costs is to use reliable sources of income, which may include Social Security, an employer’s pension if you have one, proceeds from the sale of a business and annuity payments. As you look at what basic expenses you may incur, be sure to account for inflation.

Ensuring your lifestyle: Beyond the essentials, you will need money for discretionary spending. This is what you will spend pursuing hobbies, traveling and maintaining your current lifestyle. To cover these expenses, consider tapping into other sources of income, such as retirement accounts, savings accounts and investments. Determine how much you can comfortably withdraw monthly or annually from these sources to put toward your passions, while remaining invested for what could be decades in retirement. Keep in mind you are required to take a minimum distribution from your retirement accounts starting at age 70-1/2.

Preparing for unexpected events: No matter how carefully you plan, life can throw a curveball. Accidents, unexpected expenses, illness, disabilities and the loss of a family member are examples of events that may derail your financial future. Cash reserves, life insurance, disability insurance (during your working years), long-term care insurance (primarily for later in life) and appropriate health care coverage are critical to protecting your retirement plan.

Leaving a legacy: People often want to support loved ones and give back to the charities and causes they value. This starts with making sure your estate plan is in order. Ensure your accounts have the right beneficiaries named and your will updated. Being thoughtful about your legacy also ensures you have a strategy around your charitable giving, both today and in the future.

Although worrying about retirement savings is common, it doesn’t have to be. You can feel more confident you will have enough money to last. Consider where you stand today and the steps you could take to get — or keep — your retirement on the right track.