Are you confident that your retirement will be your “golden years”, or are you worried that it might be your “rusty years”? I talk with a lot of people who don’t know when they’re going to retire but worse yet, they don’t know why they want to retire and have absolutely no plans as to what they would like to accomplish during retirement. Here are 7 tips to help you crystallize a better vision of what retirement could look like for you:
- lifestyle and mental well-being
- location and housing
- travel and exploration
- social engagement and hobbies
- health care and insurance
- estate planning
- financial preparedness
Investment risk assessment is not an easy thing to determine because it’s highly personal and because the market is unpredictable.
- If we do have another recession and the stock market has a major correction, will that affect your future and the things you plan to do during retirement?
- If the worst case scenario happens and you’re planning for the best case scenario, you may be in trouble.
- If you think you’ll only have a good retirement if the market does well for the next 20 years, then you may be invested wrong.
In this show, I offer a complimentary Retirement Risk Test – to take us up on that, visit our show website and request it.
I recently had a meeting with someone who contacted us from the show and who has around $2M – all sitting in cash. When I asked why, he said it’s because he doesn’t want the stress of having to watch the market fluctuate and worry about his portfolio. He doesn’t care that he’s not earning anything and concluded, after calculations, that he’ll never run out of money even though he is withdrawing from his account and has another 30 years of life expectancy.
The one major flaw in his plan? Not factoring in inflation, which in 10, 20 and 30 years means that he will have to start taking exponentially more money from his portfolio in order to make ends meet.
Listen in to find out how we can solve his problem.
When it comes to retirement, taking a “wait and see and hope for the best” approach is not the smartest way to go. Yet that’s what a lot of people do who come to me in the 10th hour, 3 months before retirement, expecting me to basically work magic and “make it all work out”. In many cases, that’s possible; but it would have been so much better if they had been proactive and started planning ahead of time. Just like you don’t plan a month-long international trip the week before, you shouldn’t wait until last minute to plan for 2-3 decades in retirement.
Here are 6 areas that you can be proactive in:
- start at least a decade away from the time you think you will want to retire
- pick your Social Security strategy wisely
- investment planning
- tax planning
- plan for Required Minimum Distributions
- estate planning
Why is it so important to get your income from your investments?
There’s a formula out there that reads as follows:
TR = I + G
Total Return = Income + Growth
The total return on any investment is a combination of the income you receive from the investment plus its total growth. Some investments only give you growth, whereas others only give you income, and some give you both.
When you invest for growth, it’s all about capital appreciation and your goal is to buy low and sell high. You could make a lot of money – but you could also lose a lot of money.
When you invest for income, you’re investing for the interest and dividends that the portfolio will give you. You know that, year in and year out, you will get a 5% rate of return, for instance, regardless of what the market does or what the value of the portfolio is at any point in time.
So what’s better – investing for growth or investing for income? Listen in.
Is 20 or 30 too early to start planning for retirement?
In my opinion, it’s never too early to start building a solid foundation when it comes to savings and investments and securing your future retirement. The most important thing you can do in your 20s or 30s is to start now. It takes time for your money to compound and when you’re that young, time is on your side. The #1 mistake retirees tell me they made was not starting early enough.
In this show, I cover 5 principles for young people to follow in order to secure their financial future, and they are related to:
1. savings and investments
2. debt management
3. career advancement
4. insurance and risk management
5. starting as early as possible