Posted by Chad E. Smith
What You Need to Know to Effectively Plan For a Comfortable Retirement
More and more Americans are worried about how they’ll make ends meet as they approach their golden years. The recession has affected many people’s retirement plan savings, and fewer companies offer traditional retirement packages.
Meanwhile, many people over 55 aren’t sure how much they need to save for retirement to maintain their standard of living, given the rising cost of healthcare and uncertainty over Medicare and Medicaid.
Whether you plan on working for several more years or you’re retiring soon, meeting with a financial advisor is the best way to plan. It may be wise for you to adjust your budget, your IRA, your 401(k) plan portfolio, or your life insurance policy.
Some helpful, general tips from industry professionals regarding retirement plans:
- Learn about and take advantage of the possible tax benefits of saving for retirement. More than a third of Americans with access to a tax-protected retirement account, such as a 401(k), do not participate, so they are missing out on tax savings. Meanwhile, many people don’t transfer their 401(k) from their former employers’ accounts when they change jobs.
- When it comes to investing for retirement, diversification is key. A financial planning advisor can help you decide how to allocate your investments—how much to put in stocks, bonds, mutual funds, a money market account, etc.—and how aggressive or conservative your portfolio should be.
- Withdrawing from your retirement plan to pay off credit card debt and make mortgage payments should be a last resort. Although nearly 20 percent of people withdraw from their retirement plans, experts recommend doing everything you can to avoid tapping into your retirement savings until absolutely necessary.
- If your retirement funds won’t allow you to maintain your current standard of living, consider retiring later or working part time after you retire. For many people, working during retirement not only brings in extra cash but also provides social and learning opportunities.
- If you’re thinking about moving somewhere with a lower cost of living, make sure you can sell your home for enough to make the move worthwhile. If you can’t, it probably makes sense to wait until the housing market improves and your home value goes up.
- One of the simplest strategies for saving more for retirement is trimming your budget. Cutting back on unnecessary expenses each month will result in significant savings over the course of a few years if you invest that extra money wisely.
- Finally, don’t forget to ask a life insurance professional to review your insurance coverage. It’s critical to have adequate life insurance protection in place—whether a term life policy, a whole life policy, or both—to safeguard your family against the unexpected. An SBLI representative can help you learn more about your insurance options. Call us at 1-800-438-7254.
When it comes to planning for retirement, understanding and exploring all of your options can help you make the best decisions for the years ahead.