Here are some things for you to consider.
The first step is to start consulting with a financial planner as early as possible. The longer you have before you plan on retiring; usually the better off you will be when you decide to retire. By having a game plan, you will have a better chance at reaching your financial retirement goal. A financial planner can help guide you and help you make the adjustments needed at each phase of your life to make sure you are on the right track to obtain your goal.
While working with you in helping you prepare for retirement, your financial planner will look at a variety of factors. One of the first ones is the age you wish to retire at compared to your current age. This will tell how many years you have to prepare for retirement. The longer you have the more options you have to work with.
Once you know how many years you have to prepare for retirement, you and your financial planner will need to calculate what your estimated expenses will be once you retire. This will include living expenses, medical expenses, travel and leisure, and any thing else you may have to pay for once you are retired. By calculating your expenses, then you will have an idea of how much money you will need during your retirement years.
The next step is to look at what sources of income or savings you will have available once you are retired. As of now, Social Security is still available to those who qualify. But as more people reach retirement age and fewer people are in the workforce, there are some questions as to how long Social Security can last.
It seems that fewer companies are giving pensions as they once did. There are still many workers from large companies and governmental jobs that continue to receive pensions. If you are in one of those jobs, then this is definitely a source of income to include.
Most companies have moved to 401k plans instead of pension plans for their employees. This and other IRA accounts are a great way to save for retirement in good economic times. It is heartbreaking however, when the stock market drops and the value of these funds have dropped as they have recently. The trick is timing your retirement while the market is up.
The stock market is a long-term game. Since 1926, stocks have outperformed bonds by almost 4%. The stock market is considered more risky than other options such as bonds. Most people think that with risks there is the additional gain. The real trick to the stock market is buying quality assets at a cheap price.
Bonds are general considered lower risk and lower return than stocks. With the recent economic uncertainty, they are becoming more in favor with some investors. Warren Buffett has recently started investing more in bonds. There are still risks related to bonds. It is important to invest in only US Treasury or high grade cooperate bonds to reduce your risks when investing in bonds.
Even with the housing market the way it is, you can even consider your house a source of income for your retirement. You can sell it and move into a less expensive house and include the money you make from the sale as part of your retirement nest egg.
You can also consider postponing retirement and continue working past retirement age. Each year you delay starting to receive your Social Security checks, you will receive 8% more when you do start receiving them.
While the return will not be much, increasing your savings can help when you are preparing for retirement. The more you can save, the less you will have to rely on from other sources for income.
Possibly the most important thing you can do to prepare for retirement is to eliminate your debt as early as possible before you reach your retirement age. With no large outstanding debt, you can concentrate more on saving and investing while you are preparing to retire. Once you are retired, if you have no debt then you will not need as much income to live off of. Or you could go on another trip you have always dreamed of.
Written by Denise Clay
Hickory, NC
Exclusive to HULIQ
Posted September 22nd, 2009 by Denise Clay
