With the future of Social Security unclear, fewer and fewer workers having a company sponsored pension plan and health care costs continuing to increase, being financially prepared for retirement looms as a significant challenge for many. With the significant fluctuations of the stock market as well as the potential for a long-term economic down turn there are many things that need to be considered as you plan for retirement.
Here are some basic strategies to consider:
Investors in their peak earning years should take full advantage of employer-sponsored retirement plans, individual retirement accounts and potentially annuities.
Asset allocation should be age appropriate and investors should avoid two common retirement savings mistakes: being overly cautious or taking excessive risks when deciding how much of their assets to invest in cash, stocks or bonds. Remember, though, that this does not ensure a profit or protect against a loss.
You should consider simple trade offs that can reduce expenses and increase savings, such as holding on to the family car a few extra years once it has been paid off.
Once you retire, stretching retirement savings to make it last is very important. Some folks are planning to work in retirement while others are postponing retirement to take advantage of added income and continued health care benefits. Given that Americans are living longer, and that market returns are unpredictable, smaller withdrawals in the early years of retirement could lead to greater long-term financial security.
Develop a detailed retirement plan. Typically, investors who are able to achieve the retirement lifestyle they want have created a detailed, realistic budget for retirement living expenses. Investors should plan for rising health care costs and other financial contingencies. To help stay on track, individuals and their spouses should review their plans annually, including expenses, investments and asset allocation.
Creating a successful retirement takes more than a one-step solution. Whether it’s finding a “fun” part-time job, eliminating one of the family cars or taking a vacation locally, retirees have implemented multiple strategies to extend their incomes, control their spending and maximize their savings.
Tags: retirement, retirement advice, retirement planning