Official Social Security Site To Retire

1. Get Serious!

Start early. The sooner you start saving, the more time your money has to grow. Put time on your side. Make retirement savings a high priority. Devise a plan, stick to it, and set goals for yourself.

2. Avoid Being too Risky with Your Retirement Money

The most common types of risk related to retirement savings are:

a) Shortfall risk. Shortfall risk can occur either from not saving enough during your working years or from being too conservative with your investments. By investing too safely, you can run the risk of not having enough money when you retire.

b) The risk of losing principal. The risk of losing principal is often associated with volatility, or the price fluctuations within a specified period of time. Although volatility is inherent in the markets, time is on your side.

3. Plan for long-term needs

You need to plan for what is known as “non-market losses”, catastrophic things such as health care and long-term care.

According to the Health Insurance Association of America over 50% of Americans will need some form of long-term care, either at home (full or part-time), or outside the home at a managed care facility.

Medicare and private insurance will not pay for most long-term care. Weigh the cost of long-term care premiums against the cost of paying for care out of pocket.

4. Your Life Expectancy

Find the ages of all the people who died in a relevant period, add them together and divide by the number of people, and you have life expectancy. Make sure your needs will be covered even in case you live longer than you might expect based on the life expectancy tables and your own health factors. Most retirement planners are now using an age of 90 years of more.

5. Your Expenses in Retirement

Some expenses in retirement may be lower than now. Taxes should go down. Generally, loans and mortgages are paid up, so out-of-pocket housing costs may decrease. Work-related expenses are also likely to decrease, such as dues, transportation to work, work clothes, etc.

Some expenses will probably stay the same but may take up a larger share of your income. Utilities, food, gifts and contributions, and car and property insurance costs will stay fairly constant with incremental increases.

Other expenses will go up once you retire. Health care and health insurance expenses will likely increase. Costs for travel, leisure and entertainment are also likely to increase, since retirees have more leisure time.

6. Loaning Money to Your Friends and Family

Just say no! I have a friend that says her Financial Advisor won’t let her do it.

7. Overestimating How Much You Can Take Out

Setting an annual withdrawal rate is an important decision in retirement income planning. Be careful not to withdraw a percentage equal to your estimate of the return on your investments.

To provide an idea of how much might be withdrawn annually so that it would be likely to last 30 years or more, Standard & Poor’s looked back at the actual record for stocks, bonds, and inflation and analyzed all possible 30-year holding periods since 1926. It determined that the average sustainable withdrawal rate for a portfolio composed of 60% U.S. stocks and 40% long-term Treasury bonds was about 5.5% per year when adjusted for inflation.

8. Plan for the Effects of Taxes and Inflation

Inflation will cut into the value of your investments the way taxes cut into your investment return. Inflation has averaged about 3% a year over the past few decades. This may not sound like a lot, yet consider this: $100,000 today will only be worth about $74,400 after 10 years of 3% annual inflation.

Please consult a professional financial or tax advisor for advice that is specific to your circumstances.

9. Resist the Urge to Micromanage Your Retirement Accounts

According to David Foster, an accountant and certified financial planner from Cincinnati, two of the worst things to happen to retirement planning is 24 hour internet access to accounts and Daily Pricing,. Most retirees have worked hard all their lives and retirement is a time to enjoy the fruits of your labor. Micromanaging your retirement accounts just adds stress to your life for no reason.

Any of these 9 ideas may produce positive results for you however, when you use them together you have a better chance for success.