Saving money for retirement can take much effort especially if you have other responsibilities such as putting children through college, paying medical bills and handling your mortgage. Yet, even setting aside a little money can go far to provide for your old age, funds that can help maintain your lifestyle. Here is how you can plan for your retirement.
1. Meet with a financial advisor. The person who can help you most with your retirement planning is a financial advisor. Especially an individual who has your long-term interests in mine. Schedule an appointment, discuss your needs, weigh your investment options and choose a retirement path that is right for you.
2. Cut down on your spending. You will have only enough money for retirement provided you watch your spending. If at all possible, cut back on your spending to increase the amount of money you have left over. This may include bundling your insurance coverage, canceling your cable service, cutting back to one car or shopping at a warehouse club. Likely, a number of methods should be pursued together.
3. Enroll in a retirement plan. If your employer offers a retirement plan, then enroll in one. The monies saved for such a plan are sometimes matched by your employer. At the very least those funds can grow tax free. Most companies have a 4401(k) or a 403(b) plan. Your financial advisor may encourage you to open one plus pursue additional accounts, including a Roth IRA.
4. Understand your portfolio. Your financial advisor will likely have you place your funds with a variety of financial instruments. On your own you may also have money in regular savings, certificate of deposits, stocks and land. Periodically, preferably every quarter, you should monitor how your investments are doing and adjust them accordingly. This may mean moving funds from one type of an investment to another one.
5. Base your investment portfolio on your risk ability. Not every investor will want to bear the same level of risk. Understand your risk ability and invest accordingly. You will get higher returns by choosing more aggressive stocks. You also stand to lose more money by pursuing that option. As you near retirement age, you may want to move funds from riskier investments to more stable investments.
6. Consider your age. You are in your mid-50s, the children are grown and you are done paying for college. Unfortunately, you and your spouse have little money to show for your retirement. Even so, you can spend the next 10 to 15 years saving aggressively. It is at this time you should maximize your investing and calculate how much money you will need for 25 to 30 years or more of retirement. You may need to work longer or work part-time after you retire — find the plan that best suits your needs.
7. Your home can make a difference. For many older Americans, their homes will provide a significant amount of their retirement income. Here, you may consider selling your house when you are older, moving away from where you live and heading to a lower cost area. Cashing in your home can provide the funds that you need. If you prefer to stay in place, a reverse mortgage is an important consideration. Here, you get money for your home up front, funds that you can live on for many years. The downside here is that your heirs will get less money when you die.
Most Americans will live on less when they retire. Many by choice while others will have no choice. Do not put off your retirement planning for another day — your plans should be put in place as soon as possible and monitored consistently through the intervening years.
See Also — Retire Early: You Can Make It Happen