American markets have been enjoying a recent stock market rally, with some markets posting double-digit increases. It is the nature of the markets to rise and fall. So if you are approaching retirement, this might be the time to begin to lock in your stock market gains. If you’re wondering why, think about it. Many Americans will be relying on their portfolio money for retirement income once they leave the workplace. It may be to pay for spending quality time on the green, sailing, horseback riding, getting away on vacation, or whatever their preferred retirement activities may be.
Older Americans tend to have less invested in stocks because they move their savings out of higher risk vehicles in their pre-retirement years. This is typically to protect their retirement nest egg, since they tend to have less time for recovery. Unfortunately, many Americans are still reeling from losses from the 2008 financial crisis. They are looking at a delayed retirement.
You can take steps to protect the financial gains your portfolio has enjoyed and start preserving your wealth for your retirement lifetime. This may call for a shift in financial focus — a start to evaluating safer retirement vehicles which have a lower risk profile than equities, like annuities and life insurance. It is a good idea to review your portfolio at least once a year, to review to make sure that your portfolio is meeting your goals, objectives, and expectations. As you approach retirement, you may want to begin to transfer your portfolio to a more risk-adverse position and realize any financial growth you’ve achieved before the markets make their natural corrections. Read More
When you think about saving for retirement, it’s easy to focus on putting more money away and diversifying your investments or retirement funds. Another easy way to not only find more money for retirement, but to also get used to living on less, is to reduce your current spending and monthly bills. As always, you can stop buying that delicious latte every morning.
James C. Molet at Retirement Savvy runs an excellent feature called Living Frugally that provides excellent advice on cutting daily expenses, but let’s focus on some of the big-ticket expenses that are eating up your income and future retirement savings. Read More
You’re thinking about retirement. Maybe you have 5-10 years left to prepare for this exciting change. It’s time to consider what you need to do to ensure you have sufficient money for the retirement lifestyle you want.
Let’s assume you and your partner have talked about your retirement expectations and know how much you will need, how much you have, and a plan for reaching those financial goals. Then you can take these final years before retirement to prepare and ensure that you are able to enjoy retirement.
Let’s get into some of the issues you and your partner should be thinking about as you approach your post-work years. Read More
Do annuities make sense for your retirement portfolio? Well, when used right they can be a very powerful financial vehicle, especially for retirement. Annuities allow an investor to pay a lump sum of money upfront and then receive an income stream in return for a set period of time. The insurance company is bound to provide this income stream by contractual guarantees. The income stream can last anywhere from a set duration to a lifetime.
Here’s a quick look at some annuity basics and other helpful tips to consider. Read More
How should I invest for retirement? And during retirement? There’s a lot of great advice to answer these questions – a wealth of strategic financial tips for nest eggs of all sizes. But equally important is what not to do. Below are 3 retirement planning mistakes—avoid them at all costs. Read More
It’s time for the million-dollar question. Literally. How much do you need to save to have $1 million in retirement savings? Apparently, if you’re 21, you only need to save $25 a week to be set for a comfortable retirement. Ah, to be 21 again.
Because that ship sailed long ago for us, we need to make sure that we are financially prepared for our retirement. $1 million seems to be the magic number that comes up often when we talk about retirement savings. This is based roughly on the idea that you can fund your retirement with a 4% draw, supplement with Social Security, and have enough money for a 30-year retirement with a comfortable, if not extravagant, standard of living.
But with lingering low interest rates, market volatility, and lengthening average lifespans, a 4% withdrawal strategy may not work for many Americans. What to do about it? Read More
You’ve heard it before: the best laid plans of mice and men often go astray. Through all stages of our personal and financial lives, we know there will inevitably be twists and turns. The market goes up, the market goes down. But there are safer routes than others for our money. While there’s no foolproof Waze app for retirement savings and investment, there are directions we can take—and avoid!
First, Let’s Look at Your Withdrawal Rate.
Two key players in the viability of your financial plan for retirement are the size of your retirement nest egg and the pace at which you plan to spend it. This is your withdrawal rate. After putting in the time and consideration to determine the magic number for your retirement and your intended rate to spend it down, you may have reservations about your actual investment portfolio and whether it will perform as expected to sustain you over time.
Since no one can say how long you will live, our lens of The Rule of 100 helps add perspective to this all-important strategy of making sure your retirement income will last. Read More
Note: This is the fourth part of a month-long series on financial awareness in the U.S., and how investors are planning – or not preparing – for retirement. Here are some important takeaways that are keeping Americans from financial security and peace of mind.
For the first time in a long while, Americans are feeling more stressed than ever. If surveys are any indicator, money concerns are a big part of it. In fact, more Americans are losing sleep over money issues than before the Great Recession.
According to CreditCards.com, 65% of Americans report having insomnia over money issues – a 9-point jump from 56% in 2007. And what accounts for these new, high levels of stress? Here’s a quick look at the sleep killers for Americans in 2017. Read More
As prior posts have mentioned, the 401(k) is the retirement savings plan most used by U.S. employers. Millions of Americans use it for their retirement saving goals. It’s no surprise as to why.
For one, the IRS permits pre-tax employee contributions of up to $22,500 (2023 contribution limit). Plan participants aged 50 and up are able to make pre-tax, “catch-up” contributions of an additional $7,500. Many 401(k)s also come with an employer match, providing a powerful savings incentive for U.S. workers.
Yet while the 401(k) is a valuable retirement savings vehicle, it has its downsides. One negative is the presence of high cumulative fees within some 401(k) plans and their in-plan investment menu. Over time, costly high fees can dwindle away earnings, which also siphons off money that would grow with compounding.
So there is also the opportunity cost of the money investors could have earned if those funds remained within their 401(k). It could be a difference of thousands, if not tens of thousands of lost dollars in potential retirement income. Read More
Note: This is the second part of a month-long series on financial awareness in the U.S., 401(k) plans, and how investors are planning – or not preparing – for retirement. If you have an employer-sponsored retirement plan, read on for insights on how a lack of financial education can tie into people’s experiences with their 401(k) plans.
Financial Literacy: A Must for Retirement Success
Financial wellness is the ground-spring for a happy and financially secure retirement. As common sense may indicate, this begins with well-informed retirement planning decisions. But many Americans fall short in their knowledge of even the basics, as numerous consumer surveys document, year after year. And in turn, this knowledge gap can lead into broken retirement dreams: crushing debt, depletion of savings, scaled-back lifestyles, and other headaches that undermine Americans’ post-work standard of living. Read More
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