Retirement planning and estate planning should work hand in hand, and while plenty of people have admitted in recent studies that they don’t have the basic tools of an estate plan such as a will or trust, a 2018 study conducted by Northwestern Mutual found that many Americans feel they have inadequate retirement plans. 

In fact, 70% of respondents said that they felt they hadn’t done enough for planning for their retirement. To avoid falling in the trap of getting into financial difficulty too close to your retirement age, choose to plan backwards instead. Many people plan backwards to accommodate their individual situations and lifestyles. This starts by considering the amount of annual income you might need during your retirement. Then you will want to decide what kind of life you hope to achieve in retirement and what kind of price tag might be associated with it.

Since this answer will be unique for everyone, it’s important to come up with your own solution and to plan backward. Some people want to spend time at home with loved ones and helping to raise grandchildren, whereas others would be focused on travelling extensively. Think about the possible costs of all these social activities and hobbies, and don’t forget about the possibility of a high price tag that can come from long term care and health events that occur later in life.

Having appropriate planning done well in advance can help you to enjoy a retirement as you intended but failing to incorporate health care planning such as ways to pay for it, Medicaid planning options and having powers of attorney to enable another person to step in and make decisions on your behalf could all compromise your ability to be successful.