4 Tips to Properly Save for Your Retirement
The major concern for the baby boomer generation these days is making sure they have enough saved to eventually retire. Having enough saved for retirement means that you don’t see a drastic change in your way of life. As the typical baby boomer is approaching 60 it’s time to see where you stand financially and figure out what steps you should take to ensure you can retire with ease. Here are a few ideas for you to consider if this is a concern of yours:
1. Take stock of your situation. If you’re within the five-year range of retiring it’s time to analyze your financial position. Many companies are now able to counsel their employees in regards to their retirement accounts, whether it’s a pension or a 401 k plan. If you’ve been someone who invests in high-risk investments it’s probably time to step back and change your portfolio. The years right before you retire and right afterwards are the most critical. Find a financial advisor you can trust to help you at this juncture.
2. Determine your budget. Suppose you start your retirement with $500,000 it’s considered wise to only withdraw about 3 % in the first year after you’ve stopped working. Many people would think this is too conservative. But if you can start with this low number, you can then increase it a little each year to counter inflation. Conservative withdrawals early on in retirement will help you in the event of a bear market.
3. Test drive your retirement. When you’re approaching the magic year you plan on retiring, try living on what you think you’ll have coming to you in retirement. Try living on your expected cash flow in retirement for a year or two before actually leaving your job. Factor in all living expenses and plan accordingly. If it works out that you can live on 85 % of your yearly salary, kick in 15 % to your 401 k during the last couple years that you’re working. This will keep you from having to raid your retirement account in the future.
4. Choose your dates wisely. You want to make sure you’re maximizing your income once you retire. However, many baby boomers are still working after they retire from their normal job. If this is the case with yourself, then be careful about when you begin to claim your social security. If you start drawing early on your social security you’ll see a decrease in what you can receive compared to if you waited until the normal retirement age of 66.
By-line:
Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for CurrencyTrading.net, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com
1. Take stock of your situation. If you’re within the five-year range of retiring it’s time to analyze your financial position. Many companies are now able to counsel their employees in regards to their retirement accounts, whether it’s a pension or a 401 k plan. If you’ve been someone who invests in high-risk investments it’s probably time to step back and change your portfolio. The years right before you retire and right afterwards are the most critical. Find a financial advisor you can trust to help you at this juncture.
2. Determine your budget. Suppose you start your retirement with $500,000 it’s considered wise to only withdraw about 3 % in the first year after you’ve stopped working. Many people would think this is too conservative. But if you can start with this low number, you can then increase it a little each year to counter inflation. Conservative withdrawals early on in retirement will help you in the event of a bear market.
3. Test drive your retirement. When you’re approaching the magic year you plan on retiring, try living on what you think you’ll have coming to you in retirement. Try living on your expected cash flow in retirement for a year or two before actually leaving your job. Factor in all living expenses and plan accordingly. If it works out that you can live on 85 % of your yearly salary, kick in 15 % to your 401 k during the last couple years that you’re working. This will keep you from having to raid your retirement account in the future.
4. Choose your dates wisely. You want to make sure you’re maximizing your income once you retire. However, many baby boomers are still working after they retire from their normal job. If this is the case with yourself, then be careful about when you begin to claim your social security. If you start drawing early on your social security you’ll see a decrease in what you can receive compared to if you waited until the normal retirement age of 66.
By-line:
Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for CurrencyTrading.net, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com
1 Comments:
Thanks for the advice!
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