It's Never Too Early to Plan Your Retirement
A comfortable and worry-free retirement is the goal of many Americans.
However, the biggest obstacle in attaining your retirement goals could be
the natural tendency to procrastinate and avoid thinking ahead to formulate
a plan of action. As a result, many people are left scratching their heads,
with little time on their side. How will they attain the funds needed to
enjoy their retirement years?
It is never too early to begin planning for your retirement. Generally, you
will desire to maintain a standard of living consistent with your
pre-retirement years. However, you may need about 60 to 80 percent of your
pre-retirement income to support a comfortable retirement lifestyle.
Proceeds from pension plans and Social Security may account for as little as
35% of the typical retiree’s income. Another 25% may be derived from earned
income, either full or part-time employment. In order to retire comfortably,
the remaining amount needed would have to come from your personal retirement
savings or investments.
Investing to Fill the “Void”
The amount needed to fill this income “void” will depend on the amount of
Social Security you will receive and what income you will have from other
sources, such as a company pension plan or your own Individual Retirement
Account (IRA). That’s why the steps you take today (such as investing,
diversifying, and increasing already existing investments), will be vital to
help fill this gap and secure a comfortable retirement.
Steps to Take Now
Contribute the maximum amount to your IRA. With the recent tax law changes,
IRAs give taxpayers more flexibility than ever, but they’ve also become more
confusing.
Devise and utilize your own individual investment strategy.
Adjust Your Strategy
When you are younger, you may opt for growth-oriented investments. Consider, however, that investment returns and the principal value of stocks and mutual funds may rise or fall due to market conditions, and shares may be redeemed for more or less than their original purchase price. Thus, the degree of comfort you have with market fluctuations should determine your overall investment strategy. As you grow older, you may wish to moderate risk with fixed-income investments, particularly if you plan to take distributions soon after retiring. A balanced asset mix should be employed.
Upon retirement, it may not be necessary to remain strictly focused on fixed-income investments. Growth investments should still be considered because you could potentially spend more than 20 years in retirement.
There are many factors to consider when planning for a secure retirement. Formulating a strategy is a major step to achieving your personal retirement goals. However, beginning your planning today can be your best retirement planning strategy. Feel free to call us at 603-437-1992 about your retirement needs.
