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Tuesday, December 12, 2017
Article written by Matt Alexander

Retirement Management

Americans are living longer and, unfortunately, saving less.

There are basically four potential sources of income available to support retirement expenses: employer-sponsored plans, Social Security, personal savings and investments, and part-time employment.

The management of retirement assets is an ongoing process that begins well before retirement by determining objectives, considering risk tolerance and examining one’s time horizon. This process then continues with regular monitoring of the plan so that necessary modifications can be made throughout retirement.

It is critical for investors to be aware of the effects of poor or a complete lack of retirement planning.

Retirement can be one of the most active times in an individual’s life. However, it can also be one of the most expensive.

Attributed largely to lack of planning, many retirees are finding themselves in their golden years without enough retirement resources to maintain a decent standard of living. For these individuals, doing the things they’ve always dreamed of starting a new career or hobby, traveling, buying a second home, spending time with friends and family, volunteering in the community – is not even a consideration. For some, even having enough money to pay for basic needs is out of reach.

Pension Plans

As we all know, pensions are starting to disappear. Retirement plans such as 401(k)s and 403(b)s are taking their places. This is actually a good thing because it forces employees to start investing. You know "Give a man a fish, feed him for a day. Show a man how to fish, feed him for a lifetime." Since there are limits on how much you can contribute to these plans each year, you may want to set up others accounts such as an IRA or retail brokerage account. For 2006, the max annual contribution is 15K or 20K if you are 50 years of age or older.

Social Security

In the past, individuals had been able to rely on Social Security when they retired. Now, according to the Social Security Administration, the average monthly Social Security retirement benefit check for January 2004 was $723.90. Chances are, this is not enough to do the things most dream of for retiring – traveling, buying a second home, starting a new hobby, or simply living in dignity.

Personal Savings

You probably should not keep too much money sitting in your checking or savings account. You may be earning 1% or 2% and that is nothing when you factor in inflation. We all know that a dollar can buy more today than it can tomorrow. Inflation is currently at about 3%. Remember that interest is taxed at ordinary income, so you basically need at least 4% to break even.

Investments

The stock market has returned 9.5% over the last 20 years and has consistently outpaced inflation. At what cost~volatility. It is up and down, but if you wait it out, you will most always be in a better situation. The good news is that there are many more investment vehicles available to help you attain your goals. There are products that guarantee you a minimum return while at the same time having exposure to the potentially higher returns in the market. There are funds that will do well when the market is not. The two main factors to consider are your time horizon and your risk tolerance.

Part-Time Employment

Basically, you should never have to return to the workforce unless you choose to. Most people have a goal to work for 30 years or so and then relax and do what they want for the rest of their lives. There are many people that have to work until they die because they have to in order to survive financially. Do not conform to that statistic.

Conclusion

While retirement is generally one of the most anticipated times in one’s life, it should also be one of the most active. After all, Americans are generally living longer, staying in better health and retiring earlier.

Yet so many people are financially unprepared when the time arrives to retire. Some do not start saving soon enough and others are not aware of how much they will need to maintain their lifestyle.

It is never too early or late to start the process. Take the next step and put your money to work for you. On my website, check out the cost of waiting calculator. Procrastinating is advantageous to no one.
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