When thinking about your retirement, it’s important to consider
what type of retirement lifestyle you would like to have. Do you
plan to travel? Will your mortgage be paid off?
By Eric Heckman
When thinking about your retirement, it’s important to consider what type of retirement lifestyle you would like to have. Do you plan to travel? Will your mortgage be paid off? What will your cost of living be? What will your expenses be? If you ask these questions now, you’ll be able to calculate how much money you’ll need to save for retirement.
Financial experts say you need at least 70 to 80 percent of your pre-retirement income to live comfortably during your retirement years. Retirement brings about many changes, a significant one being your strategies for investing and conserving income. Many people in or near retirement seek conservative investment options to preserve assets with low risk exposure. However, it’s important to make a provision in your retirement portfolio for growth to keep up with inflation.
A good option for earning stock market-linked gains while avoiding downside risk is a type of fixed annuity called an equity-indexed annuity (EIA). EIAs provide long-term growth, principal protection and a reasonable rate of return.
Most important is preserving your retirement assets by avoiding some common and costly financial blunders.
Here are 10 ideas to help you ensure your retirement nest egg lasts your lifetime.
1. Build financial guardrails. You need to do a risk analysis to determine how much money you should have in higher risk vehicles. Using the Rule of 100, subtract your age from 100 and the difference is the maximum percentage of money that can be allocated to “riskier” investments.
2. Protect against shrinking income. A challenge facing retirees today is the loss of purchasing power due to the 45-year low in interest rates. An EIA can provide protection of principal and potential for a reasonable rate of return.
3. Learn the difference between bond fact and bond fiction. As interest rates rise, your income will increase, but your bond price will drop and its value will decrease.
4. Understand the stock market roller coaster. There are three basic market trends: up, down and chop. It is also important to learn how to get off the stock market roller coaster.
5. Know that titles can be deceiving. When it comes to death and estate taxes, probate and protecting your assets from creditors, titles can truly be deceiving. You need to understand your beneficiary designations and the way you can hold title.
6. Be aware of the second biggest issue facing Americans today. Do you have a long-term care solution? The likelihood of needing some form of long-term care is on the rise as people live longer.
7. Don’t suffer from information overload. There isn’t a “one size fits all” approach to financial planning. It’s very important that you have an individual financial review before you act on advice geared toward a mass audience.
8. Live by the Two “Ps.” These are protecting your principal and a peaceful lifestyle. There are investment options available to help ensure a comfortable future.
9. Remember market discovery and recovery. Many people discovered the stock market a long time ago and are still recovering from that same market right now. More often than not, you can’t rely on the market to make that money back too soon. You’ll need additional investment strategies.
10. Don’t live now and plan later. Start building a legacy now for your loved ones. There are many ways to start saving now for those important things, without affecting your retirement income.
Proper planning will help ensure a comfortable retirement. By keeping these various financial ideas in mind, you’ll be on your way to building a strong financial foundation. It’s also wise to consult a qualified professional experienced in retirement planning. He or she can help you make the best decisions for your financial situation so your money is there when you need it.
Eric Heckman is president of Heckman Financial & Ins. Services, Inc. You can contact Eric at www.WealthCreator.com or 297-9800.
