Planning for Retirement
SBLI of Massachusetts
December 15, 2010
An increasing number of older Americans are worried how they’re going to make ends meet as they approach their golden years. The recession has severely impacted many nest eggs, and with it, plans for retirement. This is compounded by the fact many over 55 are not sure how much they need to save to maintain their standard of living – at a time when health care costs continue to rise. Whether you plan on working for several more years or retirement is right around the corner, meeting with a financial planner is your best bet in strategizing and readjusting your budget and portfolio. Meanwhile, here are some general tips from several industry experts:
- While nearly one in five have withdrawn retirement assets to pay off credit card debt and make mortgage payments, experts say that should be a last resort. Do everything you can to avoid tapping into your retirement savings – that nest egg is more important than ever.
- If your retirement funds are not going allow you to maintain your current standard of living, consider retiring later or working part time after you retire. For many, a part time job after retirement not only brings in extra cash but also provides social and learning opportunities.
- For those considering moving to another area with a lower cost of living, much depends on if you can sell your home for the amount of money you need to make the move worthwhile. If not, it will probably make sense to wait until the housing market turns around.
- An obvious strategy is to cut unnecessary expenses from your budget. While many are living paycheck to paycheck, others have room in their budget to scale back discretionary spending each month. Cutting back on just a few monthly expenses each month will, in just a few years, result in significant savings if you invest that money wisely.
- It’s important to become informed about all possible tax benefits. More than one in three Americans with access to a tax-protected account such as a 401(k) do not participate. Also, many who do have 401(k)s have not transferred them from former employer’s accounts. Financial experts recommend consolidating all accounts so the funds are easier to monitor.
- Regarding your investments, diversification is key, and an expert will help you decide what percentage of your assets should be separated into what kind of markets.
- And don’t forget to ask a life insurance professional to review your coverage. It’s critical to have adequate life insurance protection in place to safeguard your family against the unexpected. An experienced professional can assist you with a policy review.
Here are some resources to help you get started in rethinking your retirement strategy.
As with all financial challenges, gaining a better understanding of your options will be encouraging and helpful as you reassess and learn how to make the best decisions for the years ahead.