09/05/2013: 6 Things You Need To Do Before You Retire
Nowadays, retirement savings is largely up to us. While we may have access to Social Security or pension benefits, many of us rely on IRAs, 401K plans or other individual savings vehicles to ensure that we have enough money to retire without worry.
As a general rule of thumb, you need a nest egg that can provide up to 70 to 90 percent of your pre-tax, pre-retirement salary annually, so there’s no time like the present to make sure your retirement savings are on track.
Determine your net worth today.
By understanding your financial situation today, you’ll be able to better understand what you need to save to achieve your financial goals in retirement. Take a look at the total value of your assets, including savings, stocks, investments, your home, and other possessions, minus the value of your debts, including what you may still owe on your mortgage. Even if your net worth is negative, determine what you can do to get on the right track.
Consider a 401K, Roth IRA or Traditional IRA.
All of these vehicles let your savings grow tax-deferred. With a range of investment options from mutual funds to stocks to bonds and more, you can create an investment portfolio well-suited to your risk and return aspirations. With some employers offering contribution matching programs, contributing to your plan can be very attractive.
Seek professional advice.
Getting advice from a financial planner who specializes in retirement planning could be a great option that pays off. If you are looking for overall financial guidance, assistance with retirement planning, or a comprehensive plan, consider contacting our SPF* representatives at Oak Ridge Wealth Management for a complimentary, no-obligation financial review.
As the old saying goes, don’t put all of your eggs in one basket. Financial, banking and economic experts agree that a diversified portfolio is the safest route to investing for retirement. If your savings are heavily weighted in an industry sector or single stock, you are more vulnerable to a downturn if those investments falter.
Evaluate interest rates.
With interest rates at historic lows, it may be time to consolidate debt or refinance your home mortgage. Ultimately, the best thing you can do is pay off your home by the time retirement rolls around, which will substantially increase your discretionary income.
Since we’re staying healthier and active, we are living longer, which means we can also work longer. Those approaching retirement may choose to continue working, work part-time if that’s an option, or explore a new business or opportunity related to a hobby.