For engineers and technology professionals, planning for retirement may come naturally.
As highly analytical problem solvers with an innate curiosity, the challenges that come with retirement planning may actually be enjoyable. This group’s specialized training also allows them to earn higher than average salaries for the entirety of their careers, putting them at a distinct fiscal advantage. But even if you’re part of this elite demographic, you still need a financial plan to get you where you want to go—and keep you there—later in life.
We’ve compiled the following helpful retirement planning advice specific to those in the engineering sector.
According to the Bureau of Labor Statistics, engineers earn significantly higher starting salaries than their counterparts in other fields. While the median starting salary for a college graduate in 2019 is $51,784, engineers can expect to earn a starting salary that’s 15-43% higher than this amount. Having top incomes is a substantial long-term benefit: it allows for an earlier start to saving for retirement as well as an extended opportunity to take advantage of compounding interest to grow investments over time.
This extra money could be used use to contribute to your company’s retirement plan and take advantage of any employer match that may be available. Funding at Roth IRA (income limits apply) is another good option. While investments in a 401(k) plan are typically limited to the funds offered by employers, a Roth IRA can be used for personalized investments, including stocks, bonds, exchange-traded funds and mutual funds. And because it’s comprised of after-tax investments, the Roth offers tax-free withdrawals during retirement and no required minimum distributions (RMDs). If you haven’t been sufficiently padding your employer plan, now is the time to start.
Approach your finances holistically.
A comprehensive financial plan for retirement isn’t just about investments. It should be comprised of a well-rounded set of financial vehicles that work in conjunction to produce the greatest reward while minimizing the risk. In addition to investing, estate planning, tax planning, insurance, and retirement planning all have their place to maximize your net worth and protect your family.
Revisit your plan regularly.
Once your retirement plan is in place, you’re just getting started. Think of it as an ‘evergreen’ financial blueprint that grows and changes with you, not a static document that sits idly in a shelf. Your life is dynamic and your retirement plan should be, too. At a minimum of once per year, take a hard look at your finances and lifestyle. Work with a qualified financial professional regularly to ensure that the plan you have in place is still appropriate for your evolving life and your plan is adjusted for changes in tax and estate laws.
Do you need to earn more or are you comfortable where you are? Have there been any changes to your health? Are you protected from financial risks? Are there any major adjustments on the horizon, such as moving, downsizing, grandkids on the way, getting married or re-married? Does the plan still work for you and what you want your retirement to be?
Don’t go it alone.
Because you’re smart, analytical, and have high standards for success, you may be tempted to develop your own financial plan for your retirement. But just as you excel at prudent forecasting and measurement in the engineering world, qualified financial advisors excel in collaborating on your plan.
At FAI, we understand that engineers and technology professionals have many options and that managing these benefits in retirement can be complex. Our Senior Advisor, Mark Stinson, CPA, CFP®, MBA possesses extensive experience in corporate accounting and finance, allowing him to “speak your language”. If you have questions or would like to learn more, please contact Mark at email@example.com or 410-715-9200.
About FAI Wealth Management, Inc.: Located in Columbia, Maryland, FAI focuses on helping clients create the financial future they desire by protecting their wealth, making the most of their assets, and planning for life's uncertainties. The firm combines fee-only, fiduciary-driven guidance with highly personalized, consultative financial planning and investment services that enable individuals, families, and businesses to navigate complex life transitions. Founded in 1987, FAI currently manages more than $350 million in client assets nationwide. For more information about FAI Wealth Management, please visit the website at https://www.faiwealth.com or call 410.715.9200.