What is All This Talk of Retirement Readiness?

Scott Sullivan |
You Got This

Over the last few years the term 'retirement readiness' has entered the investing vernacular. It is usually used when talking about employer sponsored retirement plans (such as 401Ks or 403B plans). Investopedia defines retirement readiness as: "the state and degree of being ready for retirement."

Retirement readiness is a term that describes your ability to maintain your current lifestyle in the years following your retirement. Retirement readiness is about being financially prepared for the days in which you won't be working and making money. It's important to understand how much money you will need to live on each year, how much income your investments can generate, and the difference between these two figures. The goal of retirement planning is to help you become aware of all these factors so they can make better decisions about your financial future



What are the factors to consider regarding retirement readiness?

There are several factors that contribute to retirement readiness: financial assets, income, and expenses. The first two are easy to understand, but how do you know what your expenses will be once you're no longer employed? That's where the third factor comes into play—a financial plan or financial roadmap.

Investment Discipline

The most important thing when it comes to being retirement ready is having investment discipline. The discipline of investing regularly and consistently can help you build up your savings over time so that by the time you're ready for retirement, there will be enough money saved up to support your lifestyle without relying on other sources of income (like Social Security).

Investment discipline will help you avoid the common pitfalls that people face when they invest. Whether it is trying to time the market, finding the next hot stock or sector, or getting in and out of the market, a disciplined strategy focuses on the long term and is guided by a well thought out financial plan.


The Importance of a financial plan and trusted advisor

Over the past few months we have written about how valuable and necessary a financial plan is especially in preparation for retirement and when you enter your golden years. Trying to figure out what your savings and spending needs are can be a daunting task since it requires careful planning and thorough understanding of the stock market.

But what happens if you don’t have a financial plan, or worse yet, if you have one but it is not being followed? In these situations, people are often left with the feeling that they are “winging it” when it comes to their finances. This is where a trusted advisor comes in.

A trusted advisor

A trusted advisor and planner can be an invaluable resource whether you are in the accumulation phase of your earning years, planning for retirement, or in the process of retiring. A trusted financial advisor can help you develop strategies that will keep your money safe, provide for your future needs, and maximize your current assets. Further, they will help provide the emotional discipline you will need when the markets are performing poorly or climbing unprecedented heights--they can help keep your investor behavior in check.

The importance of starting today

There is a well known saying that goes, "a journey of a thousand miles begins with one step." Remember it does not matter where you are today--you may have a plan in place but not following it--or you may not have a plan at all.

The point is that you can start today to make a difference in your future. You do not need to be perfect and have it all figured out--just get started! By starting today, you will have the opportunity to make progress toward reaching your goals. Further, by starting today you will also find yourself more likely to continue making progress on your journey as opposed to being overwhelmed by the enormity of what still needs to be done.


At the end of the day, retiring is not an easy process. It requires a lot of planning, discipline, and patience. A trusted advisor can guide you on the path to retirement. You may have questions about how much money you need to retire or what kind of investments are best for you. Your advisor can help answer these questions and more!

No matter where you are in life and your career, it is important to take steps today towards being retirement ready. The earlier you start planning and preparing for your retirement, the better off you will be later on down the road.