Even in the best of financial times, planning for retirement is an uncertain proposition. And here we are now on the tail end of a recession that’s been likened to the Great Depression. Housing prices are still wilting, the stock market is exceedingly unstable and many have seen their 401k’s and retirement funds dwindle to practically nothing.
What you certainly don’t want to do is end up knocking on retirement’s door and be desperately in need of credit repair or debt relief. The closer you get to retirement, the harder it gets to properly prepare. But those who get it right are likely to share these almost necessary traits.
Planning Ahead
Successful retirees planned well ahead of time to meet their retirement's financial needs. The planning process helped them to figure out the amount of money they would need to retire in relative comfort for their remaining days. Most of them also had a good idea about what they would need for their retirement and a target portfolio size that would provide just that.
So many Americans either bury their heads in the sand for too long, or maybe even worse, simply ignore their 401k’s assuming that if they’re paying money into it, then they must be fine. If you’re not 100% positive of how your finances will play out on you hit retirement, it’s highly advisable that you meet with a financial adviser to make sure you get it right.
Keeping a Low Overhead
There are obviously two sides to the equation: the money you have vs. the money you’ll be spending. So if the money coming in and the money you have saved isn’t enough, you need to keep your expenses at a minimum.
You want to be either debt free or minimally indebted on your real estate properties when you retire. That meant no new fancy homes at the age of 65. A low overhead gives you greater financial flexibility since there are a lot of uncertainties once you’ve reached retirement.
Growing, Diversified Portfolios
Retirees who triumphed had very diversified portfolios which minimized volatility. One of the greatest challenges for a retiree is to beat inflation. Three percent inflation can double the cost of living in approximately 25 years. Your retirement portfolio should hope to earn a return which is above the inflation rate to keep your purchasing power intact over time.
Having a growing portfolio during your retirement is a big change from the theory that advocated a predominantly bonds dominated portfolio. Our life span is continually increasing and if we want a good return on our assets we’re probably going to have to take some risks. So taking too little risk during retirement might actually be a big risk.
Periodic Check Ups
What’s is discusses here is largely accurate regardless of the time or the state of the economy, but in order to have a carefree retirement, it’s vital to have a periodic check up of our portfolio. Make sure that you’re still on track to retire the way you initially planned.
And whatever you do, don’t take your retirement fund for granted. And don’t bury your head in the sand. The sooner you address what your retirement needs are, the sooner you can get yourself on the road to a comfortable retirement.
