Since 2013, the Federal Reserve Board has conducted the Survey of Household Economics and Decisionmaking (SHED), which evaluates the economic well-being of U.S. households and identifies potential risks to their financial stability. According to to the most recent survey released in May of 2016 just over 38 percent of the respondents have either no intention to retire or plan to keep working for as long as possible. When asked what types of retirement savings or pension they have, 31 percent of non-retired adults report that they have no retirement savings or pension whatsoever. And 46 percent of the respondents indicate that an unexpected $400 expense would be challenging to handle and that they either could not pay the expense or would borrow the money or sell something to do so.
So even though building a nest egg and enjoying your retirement years is a major life goal for many, nobody is guaranteed a comfortable retirement. But we can guarantee that if you never start saving for retirement your chances of a comfortable retirement are between slim and none. No matter what kind of benefits your employer offers or how much of an inheritance you were given, your future security depends on your ability to maintain your assets. Intelligent wealth management is the single most important factor in whether you enjoy your retirement or not. Here are a few handy tips for retiring right.
Start With a Game Plan
Investment experts are fond of quoting something known as the 80 percent rule for retirement. This general guideline says that in order to sustain a comfortable retired lifestyle, your post-retirement income should be equal to around 80 percent of your pre-retirement income. Other experts say you’ll only need 70 percent, and some even claim you can get away with just half of your pre-retirement income. But this only holds true if you plan on doing nothing and scrimping to get by.
Although the specifics vary, it’s clear that concrete planning is essential. Even if you adopt a rule of thumb to gauge your retirement needs, it’s important to make realistic estimates well before the time they’ll go into effect. Using your current financial situation as a starting point and your desired retirement status as the destination, create a year-by-year roadmap you can follow to reach your goal.
Keep Your Eggs in Many Baskets
Many Americans enjoy employer-supported savings plans and associated perks, like tax deductions or deferrals. It’s important to leverage these resources efficiently by optimizing your contributions and avoiding early withdrawals, but retirement plans and pensions should never be your sole source of later-life income.
Smart investors diversify their assets to maximize the benefits they reap in the long run. You may put money into an IRA, a living trust, or purchase annuities to broaden your portfolio’s scope. Such diversification strategies can help you compensate for fluctuations that impact the value of some markets and financial vehicles but not others. For instance, housing bubbles often reduce the amount of money you receive from selling your current home before moving to a retirement property, but they might not affect your commercial real estate holdings as severely.
Leverage All Your Benefits
Benefits like Social Security can account for a significant part of your retirement income. If your spouse dies before or during your retirement, survivor’s benefits from life insurance policies may also help. It’s vital to investigate the state, local, and federal programs that might assist you in your old age.
Count on the Unexpected to Keep Your Plan Stable
Remember that your retirement costs don’t just include things like food, housing and transportation. You might experience health issues, family crises, and other financial hardships plus you may want to travel or take up a hobby like golf. Although it’s impossible to know exactly how much these events will impact you, your retirement plan should include a safety net to catch you should the worst occur.
Think about Downsizing to Stretch Your Wealth Further
It seems counterintuitive to those used to raising children and big families, but you can probably survive comfortably with less property than you currently occupy. Moving to a smaller home also ensures that your assets aren’t being drained by huge maintenance, tax and ownership costs. Talk to an investor or financial professional to know when might be the right time for estate planning. These services can help you decide where your wealth can be better managed.
Conquer Your Debt
Debt is one of the biggest enemies of effective wealth management, and it’s up to you whether you’ll still be dealing with the stress and expense of a mortgage after you retire. Resolving debt as early as possible gives you more financial resources that could go towards investment instead of interest.
Comment below on how you plan on retiring right.