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Like everyone, you hope for a comfortable retirement. That’s why you should put money away in your 401(k), IRA and any other retirement plan available to you. But once you reach retirement, which financial and investment strategies should you follow to help yourself enjoy the lifestyle you’ve envisioned?
Consider these 10 tips:
zx Map out your goals. Write down your goals for retirement — travel, volunteering, pursuing hobbies, etc. Then, list the factors that can affect your ability to achieve those goals. These factors include your income sources, such as your 401(k), IRA, Social Security and savings accounts, and your expenses, such as mortgage, utilities, food and travel. Once you have all this information on paper, you’re on the way toward creating a “blueprint” for your retirement.
zx Plan for a long retirement. You could spend two, or even three, decades in retirement. Keep this type of longevity in mind when you create investment strategies for your retirement.
zx Don’t spend too much in your early retirement years. Obviously, you don’t want to outlive your resources. During the first few years of your retirement, don’t go overboard on spending. Also, try to determine how much you can reasonably afford to withdraw from your financial assets.
zx Don’t forget inflation. If you spend 25 years in retirement, prices could more than double, assuming a 3 percent annual inflation rate. To make sure you stay ahead of inflation, you’ll probably need at least some growth-oriented investments, such as stocks. Of course, stock prices will always fluctuate so it’s possible to lose money, but by investing in quality stocks and making them a part of a diversified portfolio, you may be able to help combat inflation. Keep in mind, though, that diversification by itself cannot guarantee a profit or protect against a loss in a declining market.
zx Prepare for the unexpected. Unexpected financial issues relating to your family or health can crop up during your retirement years. To prepare for them, make sure you have set aside adequate “cash” reserves in easily accessible accounts.
zx Don’t reach for high yields. To boost your cash flow, you might think about investing in high-yield bonds or in stocks that promise abnormally high dividends. Try to resist this temptation. You can find other, more prudent investment strategies for adding to your income during your retirement years.
zx Protect — and insure — your health. Health care costs are a major concern for retirees. Take steps such as exercising and maintaining a healthy diet to keep in good shape. At the same time, strive to maintain adequate health insurance.
zx Obtain help with your taxes. Many of the withdrawals from your retirement accounts will be considered taxable income. To manage your tax situation effectively, consult with a tax adviser.
zx Define your legacy. Work with a qualified legal adviser to make sure your estate plans and the appropriate documents and arrangements — beneficiaries, will, living trust, power of attorney, etc. — are up to date.
zx Get a “financial checkup” each year. Consult with your financial adviser at least once a year to make sure your investment strategies are still on track.
As you near retirement, or if you’ve just retired, put these suggestions to work. It’s worth the effort.
Dusty Babitzke is a financial adviser for Edward Jones Investments with an office in Crowley. He may be reached at 817-297-2009.
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