From Legacy Moment (03/22/2013).
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Assuming you live long enough, you're going to reach a point in life when you can't, or don't want to, work. At that time, you become dependent on earnings from investments or another person's income. There is no free lunch and, unfortunately, there is no do-over. You can't go back and better prepare for the inevitable.
All too often we see people well past a working age holding down a job and performing manual tasks in an obvious need for some form of income/financial security. For a farm owner the outcome might be similar, though a bit more tenable given the lasting value of land.
In a recent report by the Employee Benefit Research Institute, workers have concerns about job uncertainty, debt and the cost of retirement. "Among workers," the report says, "more than half report less than $25,000 in total household savings and investments."
For family farmers and folks working in the ag sector, outlooks are a lot different. We're still in the heyday. Returns have never been better and sustained gains have never lasted so long. But there is a flip side and no one should be lulled into complacency, especially if your goal is succession. Everything cycles, so there will be a downturn and when it hits we won't know how far down or how long...
Heed the warning and prepare for the inevitable. Using the seven major findings in the report as a guide take constructive actions to offset the threat and limit the potential damage. Consider:
1. Plan your career. Maintain the edge by continuous learning and professional development.
2. Invest off the farm. A diversified nest egg is a good way to prepare for an economic downturn, and it allows you to prepare for succession to the next generation.
3. Establish a retirement plan. Use the tax benefits afforded by a retirement plan and make regular contributions.
4. Understand the effects of inflation and the increasing cost of living. Always factor a cost of living adjustment into your retirement calculations.
5. Monitor the effects of the Affordable Health Care Act. The cost of health insurance whether through a government program or private source will affect a person's ability to retire.
6. Don't guess when it comes to how much to save and where to invest. Use real numbers and calculate your needs based on facts and written budgets.
7. Get professional help for financial planning. They say, "a person who self-medicates has a fool for a doctor." The same might be applied to other professional specialization, especially related to financial matters and tax implications.
News & Resources for You:
Read more: 'EBRI's 2013 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many'
This tool might help you begin to consider retirement factors.
Guesswork won't do. Be sure to realistically calculate your estimated retirement income and expenses.