photo by Nicolas Valentin
Although saving for retirement is always important, the way you approach it will vary depending on your age. The following excerpt discusses how to best save for retirement in your 40s and 50s.
Saving For Retirement At Any Age
by Scott Reeves. To view the complete article visit Forbes.com
Investing In Your 40s
You’re Not Immortal
That sound you hear is time whistling in your ears. Ahead are the first foothills of middle age, not to mention a double chin, thinning hair and teenage kids who drive you nuts. But relax, Old Timer, because there’s still time for aggressive investments in your retirement portfolio.
Up The Allocation
By now, you’re established in your career and should consider setting aside 15% or 20% of your salary for retirement. You’re also an experienced investor and can make wise decisions with the help of your financial advisor. Set up a meeting. It’s time to get serious.
Pencil It Out
How do you want to spend your retirement? What will it cost? Crank up the spreadsheets and match your projected retirement income with estimated expenses. This is a good reality check. There’s still plenty of time to make needed adjustments.
Trappings Of Success
Yeah, yeah–a BMW, Lexus or Mercedes is nifty. But remember that the life cycle of a car involves boobs backing into it in parking lots, crazies crunching it in traffic and birds bombing it. Moral: Don’t let the trappings of success smother your retirement plans.
The numbers in the early draft of your retirement plan may have been yanked out of the air. You’ve now got years of experience to draw on. Update the plan and make needed adjustments.
Sit down with your adviser and review the performance of your investments. What did you do right? Wrong? What could you do better? Differently?
You Haven’t Started?
Duh! If you haven’t started planning for retirement, remember that it won’t get any easier with age. If you’re just starting, consider setting aside as much as possible. Talk to a financial adviser about where to put your money–don’t exceed your risk tolerance.
Investing In Your 50s
Switch On The Turbocharger
If the calendar doesn’t focus the mind, your eyes aren’t open. If you haven’t started saving and investing for retirement, it’s time to get busy. You probably won’t be able to retire at 65, but with careful planning and shrewd investments, you can call it a career in your 70s.
Check The Actuarial Tables
The average life span is increasing. What was a sufficient retirement plan in the past may not cover the additional years many are expected to live in the future. This means setting aside more money now.
A late start limits your options. Focus on what can be done. Be realistic. Don’t expect too much. If you’ve been investing for years, check your portfolio and think what you can do with what you’ve set aside.
Get An Adviser
If you’re late to the game, meet with an adviser ASAP who specializes in retirement planning. Don’t panic. Make a plan. Set aside as much money as possible. If you don’t develop a plan and stick to it, you’ll have to develop a taste for dog food and ketchup in retirement.
Stay The Course
If you’ve been investing for years, review your plan and make needed adjustments. Now may be the time to start moving into less risky investments such as bonds and maybe some real estate. The closer you come to retirement, the more conservative your investments should become.
Redefine Your Needs
Some say you should have at least 70% of your income in retirement. Sounds reasonable, if you can live comfortably on 30% less. If you can’t or simply don’t want to cut way back, get busy on rustling up additional money for retirement.
Retirement is changing. It’s no longer just a matter of moving to warmer climes to play golf. Many people are doing consulting or part-time work. The extra income and additional years in retirement may alter your plans. This is an opportunity. Check it out.
Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.