With health care costs continuing to increase, the future of Social Security unclear and pension plans available to fewer and fewer workers, America's retirement readiness is a major concern for both individuals and the nation as a whole.
Since June 2004, Fidelity Investments has completed about
200,000 income plans for retirees and pre-retirees who faced the daunting task
of gauging their preparedness for retirement. Fidelity learned that some
simple, yet often ignored, investment strategies can help ensure a more
comfortable retirement. Here are some basic strategies to consider.
* Make it work while you're still working. Investors in
their peak earning years should take full advantage of employer-sponsored
retirement plans, individual retirement accounts and deferred annuities.
Asset allocation should be age appropriate and investors
should avoid two common retirement savings mistakes: being overly cautious or
taking excessive risks when deciding how much of their assets to invest in
cash, stocks or bonds. Remember, though, that this does not ensure a profit or
protect against a loss.
Individuals also may want to take into account simple trade-offs
that can reduce expenses and increase savings, such as holding on to the family
car a few extra years once it has been paid off.
* Make it last as long as you do. Once you reach retirement,
stretching retirement savings to make it last is very important. Some investors
are planning to work in retirement while others are postponing retirement to
take advantage of added income and continued health care benefits.
Pre-retirees may want to consider putting their salaries
into income annuities, which some call "self-made pensions" because
they provide guaranteed lifetime income.
Finally, given that Americans are living longer, and that
market returns are unpredictable, smaller withdrawals in the early years of
retirement could lead to greater long-term financial security.
* Make it count to live the lifestyle you want. Typically,
investors who are able to achieve the retirement lifestyle they want have
created a detailed, realistic budget for retirement living expenses. Investors
should plan for rising health care costs and other financial contingencies. To
help stay on track, individuals and their spouses should review their plans
annually, including expenses, investments and asset allocation.
Creating a successful retirement takes more than a one-step
solution. Whether it's finding a "fun" part-time job or eliminating
one of the family cars, retirees have implemented multiple strategies to extend
their incomes, control their spending and maximize their savings.
Disclaimer:
This article is presented solely as an example and is not meant to replace
qualified financial advice. If you or someone you know require up to date
financial or legal help, seek qualified assistance. No content on this site
should ever be used as a substitute for direct legal counsel from your lawyer
or a qualified attorney.
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