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Visit interviewee Bill Losey's website at MyRetirementSuccess.com
If the recent mood swings in the stock market and your declining 401k balance are making you feel like you’ll never be able to fully retire…you’re not alone. This market volatility is causing a lot of angst but there are some things you can consider doing to make retirement a reality. Here are six top tips for creating a better retirement picture:
1. Control your emotions - take a deep breath. Greed and fear are the two things that move the market. We have periods where the markets get ahead of themselves and investors become too optimistic – and other periods where investors begin to panic, throw the baby out with the bath water, and become overly pessimistic. We are obviously in the throes, or very close to the latter scenario. This volatile period will pass like all the others have.
2. Consider increasing your annual savings and retirement contributions. The younger you are and the earlier you start saving, the more years your money can grow tax deferred inside your 401k or IRA. This tax deferred compounding can mean thousands or tens of thousands of extra dollars for you to spend come retirement time.
3. Consider reallocating your 401k/IRA to higher yielding investments. I realize that this may be counterintuitive to what you’re feeling given the recent market slide but perhaps you should invest more aggressively. Over time, stocks have historically outpaced bonds and inflation. If you have 10 years or more until your retirement date, you may well be rewarded for taking this additional risk. Certainly, past performance is no guarantee of future results and I’m not saying you should get more aggressive; but you should take a few minutes and review your asset allocation.
4. Consider retiring later. Don’t retire when what you really need is a break. All too often people in their fifties and sixties retire or take an early incentive offer because they think they’re ready to stop working. After a few months or a few years they find themselves bored and restless and wanting to go back to work. Before you decide to fully retire, discuss a phased retirement or flexible work schedule with your employer. Explore all of your options before retiring. The longer you work the less you would need to accumulate to afford your desired lifestyle.
5. Consider lowering your investment costs. Do you have any idea what you’re paying in dollars and cents for your investments and/or investment management? If you’re like most people, you don’t have a clue. Recognize that each investment has its own internal cost structure. Usually this information is contained in small print in the back of the prospectus which most people never take the time to read. Additionally, these fees usually get skimmed off the top and you don’t even realize it. You get my point! Take some time and review your investments. Understand that every dollar you lower your investment costs by is another dollar in your pocket. Can you say ca-ching?
6. Consider reducing your retirement income needs. At the end of the day (or work week), you can only control what you can control. If you can make astute lifestyle choices, control your spending, eliminate your debts and live on less, you may feel more in control of your future. FYI - my happiest private clients are those that have downsized, organized and simplified their lives.
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