Retire Wealthy Or Not At All
Reaching retirement wealthy is not a unique desire; however accumulating enough money to do so is a unique accomplishment. Everyone is not cut out to retire wealthy because everyone is not qualified to make the extreme sacrifices necessary.
Retirement planning is hard work. You need to make ends meet during your working years while at the same time accumulate enough money to last 30 retirement years. That’s a big job.
If retiring rich were easy, everyone would be doing it. Approach retirement planning properly and you can turn your desire for wealth into reality.
Step #1 – Control Your Cash Flow
If you want to reach retirement wealthy you need to be strict about the management of your money. Always remember that it’s not what you make but what you keep that will count in the end.
When you waste money you have less to invest into your retirement plans. Control your debt, it’s a big money waster. The interest and fees paid on debt is money that could be put into your investments vs funding your creditors.
Step #2 – Invest Wisely
Determine Investment Objectives
Your personal investment objectives will determine the type of investments you are comfortable with. These objectives will also determine your asset allocation and investment diversification.
Examples of Investment Objectives:
- Growing your retirement investments large enough to leave some money to your heirs.
- Generating enough retirement income from your investments to retire early.
- Capital preservation. Protecting your investments from the damaging effects of inflation.
Determine Your Portfolio Diversification
When you diversify your investments or spread them around amongst different investments such as large cap, mid cap, small cap, international mutual funds and cash, you limit your exposure to losses. Different types of investments will respond to market conditions in different ways which usually helps keep losses to a minimum.
Determine Your Asset Allocation
To increase your potential to reach the highest possible return of your investments, invest in different market sectors; stocks, bonds and cash.
Your asset allocation is best determined by your personal investment objectives, risk tolerance and time horizon. In other words, how comfortable you are with risk and how much time your investments will be in the market before you need to make any withdrawals.
Risk tolerance is a personal thing. Only you will know how much risk you are willing to take with your investments. Typically the greater the risk, the greater the return on an investment. Cash equivalents such as money market or certificates of deposit generally pay little because the return is guaranteed, there is no risk.
There is a greater risk of market fluctuation with stocks than cash equivalents.
Step #3 – Manage Your Taxes
You work hard for your money and even harder to find some to invest into your retirement plans. Unfortunately taxes have a way of chipping into your investment money. You can control some of the effect taxes have on your retirement investments by choosing the proper investments.
Some investments are tax-exempt while others are tax-deferred. Your investment objectives will help determine which type is better for you.
These include municipal bonds and Roth IRA’s. The income you earn on a tax-exempt investment is not taxed.
These include 401k and 403b retirement plans, traditional IRA’s and annuities.
What Will Be There At Your Retirement?
The only money that will be there when you retire is that money you sent ahead. If you do not invest for your retirement who will? Don’t delay, get started today, you will be glad you did.