55 and no financial plan by the hour: The biggest financial mistake some Americans make

According to Prudential Financial’s 2024 Pulse of the American Retirement Survey, Americans age 55 have less than $50,000 in retirement savings.

Even though a large number of financial planners advise that people save more than eight times their annual salary before reaching that age.

Being ill-prepared for retirement just 10 years before the stipulated age not only affects the people who are in this situation, but also their immediate family members or closest colleagues. In many cases, they are the ones who will feel the need to support them in this situation, most likely, on a constant basis.

However, this is not the only setback that a person who is not prepared for retirement at 55 years of age could face. They may also present the following problems:

– Need to continue working:

You may need to continue working beyond your desired retirement age. This can limit your free time and affect your health.

– Difficulty covering unexpected expenses:

Medical expenses, home repairs or other emergencies can be difficult to cover if you do not have sufficient savings.

– Stress and anxiety:

Financial uncertainty can generate high levels of stress and anxiety, affecting your quality of life.

– Limitations to enjoying retirement:

Without proper planning, you may not be able to enjoy the activities and trips you had planned for your retirement.

On the other hand, the survey assured that while the reality of 67% of people aged 55 is that they fear running out of savings.

On the other hand, people aged 65 only fear 59% and only 52% of those aged 75 have the same concern.

These data mainly mean two things.

The first is that while these people are more immersed in their golden years, they are less concerned about the money they have saved. And the second is that the reason may largely be that they prepared better to have a retirement mainly characterized by financial tranquility.

Now, according to Andbank (2015), the concept of financial planning was born in the 1970s in the United States. From the need to plan and organize the steps to follow to achieve the financial objectives of people and companies.

In any case, although the topic of financial planning is not something totally new, it has undoubtedly evolved over time.

Today, there are various ways to access financial planning. And there are even people who educate themselves to achieve the best planning of their finances.

And others who do it not only for their lives, but who become professionals and provide certified financial planning and advisory services.

When we talk about financial planning, we must take into account the advantages that this practice offers not only in retirement, but before it.

Since we should start this process years before, or at least as far away as we can from that moment, let’s look at some of its benefits:

– Peace of mind and security:

Knowing that you have a solid plan for your financial future will reduce the stress and anxiety associated with financial worries. You will be able to enjoy greater peace of mind and security.

– Achieve your goals:

Whether it is buying a house, traveling, starting a business or simply enjoying a comfortable retirement, a financial plan will help you set realistic goals and develop a clear path to achieve them.

– Greater control over your money:

Understanding your income, expenses and assets will allow you to make more informed financial decisions and avoid unnecessary expenses. You will have greater control over your money and will be able to optimize your resources.

– Protection against unforeseen events:

Life is full of surprises, such as illness, job loss or emergencies. An emergency fund will help you face these unforeseen events without compromising your financial stability.

– Growth opportunities:

Financial planning will allow you to identify new investment and growth opportunities. You will be able to maximize your savings and make your money work for you.

At the same time, when thinking about retirement, many questions may come to mind. For example:

• What do I do with my 401k or my 403b?

• When should I apply for Social Security?

• How can a Roth IRA help me?

• What are Required Minimum Withdrawals and when should I make them? and a lot of other questions.

And for each of these questions there is an answer, however, it varies depending on each person and their financial reality and how they want their retirement to be.

Now, just as there are people who feel completely prepared to manage their portfolio, make their investments, and be the treasurers of their own money

There are also people who are so busy generating as much money as they can to meet their goals and ensure a peaceful retirement, that they do not have time to see how to manage their assets and even optimize them.

There is also another type of person who is like a mix between the last two. And it is a person who has a very good knowledge base about financial planning.

But sometimes they like to resort to the opinion of an expert on the subject, to corroborate if their portfolio is on the right track and if there is any opportunity for improvement.

But the question is:

Is there a financial planner who can advise me on my portfolio but who doesn’t necessarily have to manage my money or my investments or charge me a commission tied to my profits?

And the answer is yes, there is. Even if you don’t have a giant portfolio, with thousands and thousands of dollars, and I’ll explain why.

There are Certified Financial Planners who provide a service called Hourly Financial Planning.

This service is based on a meeting for the hours you need with this expert. In which they will evaluate your financial reality, and you will be able to ask them all the questions you have regarding it.

They will advise you and tell you, based on their extensive experience, what actions you should take to improve your portfolio.

From the way you are investing, to the habits that are currently slowing down your financial growth. And many more things that will be developed during the conversation. The good thing about this format is that you can pay for the hours you need. You do not pay commissions and you can hire the CFP as many times as you think is convenient.

Finally, what I would like to convey to you in this blog is that the path of financial planning is long, it requires patience and above all will.

So that we can change habits that harm our financial health. And consequently also our mental health, because a bad reality in our finances does not give us peace of mind.

That is why it is important to start on this path as soon as possible, because there will always be room for error. Which is completely normal both in the world of finances and in any other.

However, the important thing is to have time to reflect and improve in the necessary aspects. Without a doubt, there is no greater mistake than letting time pass and not starting to plan your finances from this moment. No matter how old you are, you can still do something that you will probably be thankful for in a few years.

And as Francisco Javier Gonzales would say, “Forget about getting older and start fulfilling dreams.”

Alonso Rodriguez Segarra – CERTIFIED  FINANCIAL PLANNER™

Which provides hourly, fee-only, and fiduciary financial planning services. He has over 20 years of experience in the financial world and has been named among the Top 100 Financial Advisors in the US by Investopedia.

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Note: The comments given in this guide are for educational purposes only. Before    making a financial decision, consult your financial advisor or conduct appropriate      research. Remember that historical results are not a guarantee of future returns. In    the comments provided, this guide does not consider tax impacts. Always consult      your particular case with a specialist. We are not your financial advisor, so             remember that each case differs.

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All rights to this guide are reserved, and the occasional mention of third-party brand names is made solely for educational and reference purposes, without any interest in financial gain. This information is for educational purposes only and     does not represent an offer of products or services.