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Retirement may seem far away to many of us. Preparing for that distant future often isn’t high on the financial priority list. But those who fail to properly plan will likely regret it in the end. Act now to create and sustain a viable and secure retirement.
Some Steps to Take
Here are a few steps that can help you begin:
Save enough. If you’re doing well financially now, it’s tempting to think that retirement saving will take care of itself. But that view overlooks a key detail: Your retirement could last three decades or more. So if you expect to maintain your current lifestyle in retirement without an income stream, you must accumulate a surprisingly large sum. And this holds especially true when interest rates are low and inflation weighs on your savings.
Plan. It’s important to work closely with your CPA to develop a financial plan that’s tailored to your individual needs, because no one plan works for everyone. A good retirement plan considers factors such as current savings, future income and expenses, desired standard of living in retirement, and expenses during retirement (including the big unknown, health care) — to name a few.
Expect the unexpected. Even if you have a well-financed retirement plan and plan to work well into your retirement years, unexpected events can happen. Family emergencies and health crises can wreak havoc with all but the most well-funded retirement portfolio. Therefore, it’s essential to be both optimistic and realistic if you want your portfolio to last a lifetime. You may want to keep a portion of your retirement funds in a cash fund to avoid having to liquidate investments in case of emergency.
Invest properly. If your retirement portfolio is too heavily focused on conservative fixed-income investments and the cost of living rises faster than your savings, you may end up losing money to inflation. Of course, the opposite approach also is risky — if you invest too aggressively to build wealth more quickly, you may become exposed to excessive market risk.
Often, it’s a balancing act between the reward you seek and the risk you’re willing to accept. This is where diversification strategies come into play. A portfolio of multiple securities and various asset types can reduce the risk of suffering a significant loss.
Start early enough. There’s a reason why people refer to the “magic” of compound earnings. The sooner you get started in saving for your future, the more time your money can work for you. And becoming accustomed to regularly setting aside a specific amount, or percentage, for retirement will foster good financial habits. The earlier you invest, the less you’ll have to save each year to achieve your long-term objectives. The longer you wait, the more you’ll have to put away to make up the difference. Remember the most important rule: There’s no time like the present to get started.
Take the first steps
Life is changeable. Current prosperity doesn’t necessarily lead to future prosperity — unless you begin to prepare now. Click here to contact us for assistance with retirement planning reviews and other questions.