No matter your time horizon for retiring, the time to start a retirement planning program is now.
A hard lesson learned from economic meltdowns that do happen from to time is that, if people are going to be able to retire on time and in a manner in which they have always envisioned, they must shoulder more of the responsibility for their financial future.
The uncertainty of the economy, the financial markets and even government pension programs leaves the individual with no choice but to take immediate and sustained action on securing their retirement.
It’s easy to get your retirement plan underway especially with these five simple tips:
Start Saving Today
This may be akin to “fire, ready, aim” when firing a gun.
Certainly, it is important to know your target and set your sights when firing a gun or when starting a retirement planning program.
Time can either be your greatest asset or your worst enemy.
Put Your Tax Dollars to Work
The government wants you to take more responsibility for your retirement future, so much so that it is willing to let you keep some of the tax money that you would otherwise pay and put it back to work for you.
Over a long time horizon, these tax savings, if invested back into your retirement plan, could amount to a substantial amount of money.
Get Instant Returns on Your Contributions
If you belong to an employer sponsored retirement plan where the employer matches your contribution up to a certain limit, always contribute enough to generate the matching contribution.
It’s like getting an instant bonus or return on your money.
You may even consider taking a little bit more risk with your investment account because the employer contribution provides some cushion against possible losses.
Know Your Target and Set Your Sights
Now that you have your money working for you, it’s time to take a step back and set your target.
It’s important to know what you are shooting for in order to ensure that you are on track.
You will need to know how much your retirement will cost and how much time you will have to grow your retirement fund.
The amount of money you will need at retirement is based on the type of lifestyle you expect to fund and the amount of money that will be available from other sources.
Diversify for Growth and Stability
One of the bigger risk factors that can derail your retirement security is inflation.
The longer your time frame before retirement, the more havoc inflation can wreak on your future purchasing power.
Even if your time horizon is short, it is important to keep your money working a little harder than inflation in order to maintain your purchasing throughout your retirement years.
A retirement portfolio should include investments with growth potential.
The risk of market fluctuations can be mitigated by balancing your portfolio with lower risk or fixed yield investments.