Self-Directed Retirement Planning for Pre-retirees

Lundervold Financial helps you feel confident about your financial future.

Need Help Planning Your 401k?

Planning for retirement is one of those necessary things that may bring confusion for some. But may think, not you. You mightlike a self-directed 401k or another retirement plan. But what does a self-directed retirement plan entail? How can you determine how much to invest?

And how do you pick investments for your 401k?

The fact is that a self-directed 401k is not entirely self-managed. While you will make the decisions regarding the buying and selling of stocks in your portfolio, you must still use the services of an administrative custodian or financial professional.

As as financial professional, we would like to offer you the benefit of our signature five-step Blueprint for Financial Clarity™. This tool provides you with 401k advice and more, helping you explore every aspect of your financial future so that you can plan. It all starts with  two important questions:

  • When do you want to retire?
  • What do you want your retirement to look like?

Deciding how much you need to put into a 401k or another retirement plan depends in part on how well you want to retire. In part, because while we all want to retire with confidence, the simple fact is that some of us may need to adjust our expectations.

Using the Blueprint for Financial Clarity™ helps us align our present situation against our future plans. It will help you decide how to proceed in order to retire as you would like.

Naturally, if you need help setting goals*, we are here for you. Call us at 651.209.1906.

*Lundervold Financial does not provide estate planning, but we can work alongside our clients’ estate planning attorney. If you are looking for an estate planner, we can refer you to professionals who provide the following services: trusts, probate, charitable giving, estate planning, and tax planning.

Ways to Save for Retirement

Any self-directed retirement plan, including a self-managed 401k, starts with savings. In order to fund your retirement fund, you must put money into it regularly. Sporadic, occasional chunks of money help, but may not grow your portfolio as you would like.

Smooth, steady flows of revenue into your self-managed 401k may allow you to better gauge how well your plan is proceeding. This can help you make informed investment course corrections if desired.

When setting up your retirement plan, you want to calculate how much income you will need to live a certain lifestyle. Calculating future financial needs is often a complicated task involving insurance costs, annuities, stocks, 401k and other plans, real estate and projected income.

For this reason, some choose to simply max out everything they can. While this may not always be the right strategy for you, there is something to be said for savings. Remember too, it doesn’t matter how much you make. What matters is how much you keep.

That said, what are some ways to save for your retirement?

  • Increase the 401(k) contribution with each pay raise.
  • Maximize your contribution to capture the entire employer match.
  • When you receive a bonus, contribute at a higher rate.
  • Fully fund your Health Savings Account (HSA), which is pre-tax money.
  • Make IRA contributions. If your spouse does not have a 401k or you have maxed out your own, you can put additional savings into an IRA or Roth IRA.
  • If you are over 50, you can make additional contributions to your 401k, to sort of catch up. Check with your tax advisor on the limits, which change each year.

While some of these savings methods may not apply to everyone, anyone wanting to invest more towards their retirement can consider these options.

If you need help setting up any of these accounts, send Lundervold Financial an email now.

Retirement Planning Questions

When planning retirement, it sometimes seems that there is no end to the questions. Let us help answer some of the most common.

Q. Can I manage my own 401k?

A. Yes, sort of. You decide the details, but you must still have a licensed administrator make the changes.

Q. How much do I need to retire?

A. How much is needed to retire depends largely on lifestyle, both now and later. One straightforward yet potentially effective method is to have 10 times your annual salary saved by retirement age. However, this does not account for nuances in financial situations both now and later, so this method is not one size fits all. One way to know what works for you is to sit down with a professional such as Lundervold Financial advisor.

Q. How much do I need to put into my retirement plan each month?

A. If you are late building your retirement portfolio, you may want to discuss your situation with an advisor. Playing catchup is difficult, but doable. One simple way is to multiply your current salary by 10. Next, divide that by how many months you have until you retire. Consider this amount to be a minimum you need to save each month.

Q. What are the different types of retirement plans?

  • Traditional Individual Retirement Accounts (IRAs)
  • Roth IRA
  • 401(k) Plan
  • SIMPLE IRA Plans (Savings Incentive Match Plans for Employees)
  • SEP Plans (Simplified Employee Pension)
  • Payroll Deduction IRAs
  • Defined Benefit Plans
  • Employee Stock Ownership Plans (ESOPs)

Q. What is one of the most important things you can do regarding your self-directed retirement plan?

A. Be disciplined. No matter how much or little you can save each month, know that with time and consistency, your retirement plan should grow. And while it may not cover everything needed at retirement, it can be a helpful part of your strategy in reaching your retirement goals.

For help setting up your self-directed retirement plan, schedule a meeting with Lundervold Financial today. We can also help you set goals and stay on target to reach them.

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