These 5 tips are a passport to retirement success. According to the Employee Benefit Research Institute, 70% of workers are very or somewhat confident they will have enough money to live comfortably throughout retirement. However, only 43% had actually tried to calculate how much they will need to save. Consider how you would like to spend your time and money during retirement with these 5 tips:
1) Know what type of lifestyle you want in retirement. Retirement may mean working part-time, or it may mean moving to another part of the country. What does it mean to you?
2) Find out how much income you will need and how much in expenses you will have when you stop working or work full-time. Don't ever think that you will work till you drop. Most people just physically cannot work at some point in their life. Don't be naive in thinking that your wage income in indefinite. Plan for the income and expenses you will need late in life.
3) Use taxes to your benefit. It's not what you earn but what you keep. Use retirement plans to grow money on a tax deferred basis and convert IRAs to Roth IRAs when appropriate.
4) Have an asset allocation strategy- such as 60% equities and 40% fixed income and rebalance to those targets every year. Another low risk strategy is to lower your equity exposure every year as you get closer to retirement.
5) Know where you would take your first dollars if you are laid off, or taking early retirement. You may want to draw down from non-retirement plans first to avoid tax penalties, and then draw from IRAs and retirement plans later.
With these 5 tips you can avoid financial pitfalls and practice wise money management for retirement. Vital retirement strategies will be a necessity for baby boomers in the next decade and these 5 tips will get you started on a personalized financial blueprint to help ensure yourself a successful retirement.
2008© Fern Alix-LaRocca CFP® All Rights Reserved
Find your passport to retirement by subscribing to the free Whole-Hearted-Way e-newsletter at http://www.wholeheartedway.com Whole-Hearted-Way is written by Fern Alix LaRocca, a Certified Financial PlannerTM and Wealth Coach with over 24 years experience as a fee-only Financial Advisor.