Are You on the Road to Retirement? 
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Are You on the Road to Retirement?
Remember the good old days when folks worked at the same company for 25 years, then retired with pensions and benefits that kept them comfortable for the rest of their lives? Oh, how the times have changed. Now pensions are drying up, the cost of living is on the rise, and it's up to you to plan for your own retirement. Social Security benefits don't go far these days, and many people are convinced that those benefits won't be available at all by the time they reach retirement age. |
If you've got a good ten to twenty years before retirement, your saving strategy should differ from that of seniors with retirement just around the corner. If you're close to retirement age right now, the current market conditions might have you biting your nails as you watch your 401K dwindle before your eyes.
According to the experts, here's what you should do:
If you have several years until you retire...
* Be aggressive. Buy up low-cost stocks and enter into high growth mutual funds.
* Start saving now. It's never too soon to start saving for retirement.
* Make large contributions. Invest the maximum amount into a 401K. If your employer offers matching, all the better.
* Plan for inflation. An investment isn't worth the trouble if it doesn't return more interest than inflation consumes.
* Don't depend on Social Security. It might not be there when you need it.
* Hire a financial planner. The money you spend up front for their advice can maximize your money's future growth.
* Know when to slow down. When your retirement age approaches, move the majority of your money to stable stocks and bonds.
If retirement is coming soon...
Assess your situation. Can you still afford to retire at age 65? Will you need a part time job to help make ends meet? Should you delay your retirement by several years? These are tough questions, but the answers will determine what you should do with your money.
Stick with stocks, but play it safe. If too many of your money is invested in stocks near retirement age, you risk losing a substantial amount during market downturns. Invest in reliable funds, and keep about 55% of your 401K portfolio in stocks. The rest should be low-risk bonds.
Be honest with yourself. We're living longer than ever before. Will you be able to live off of your 401K for the next 20-30 years? If not, you'll need to leave some money invested in high growth funds if you want your money to sustain you. Speak with an advisor to find a good asset allocation for your retirement fund.
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