Your Mission|To Prepare For A Successful Retirement
Even though you may be struggling financially to make ends meet right now, if you ever want to be successful at retirement, do not delay in establishing your retirement plan. You will have a successful retirement if your money last as long as you do. A disappointment is when you are forced to work during your retirement years because you ran out of retirement money.
Pay-Forward Your Retirement In 2 Phases
Successful retirement planning is done in 2 phases. You start in the accumulation phase and end up in your preservation phase.
Both phases are equally important if you ever want to successfully finance your retirement. Of course the stronger you start out in the first phase, the stronger you will end up in the second phase. Your accumulation phase is used to pay-forward to your preservation phase.
Make Your Retirement Money Last
Phase #1 – Your Accumulation Phase
Your accumulation phase is sometimes called “nest egging”. Your mission during this phase is to accumulate enough money to finance your retirement years.
You enter this phase during your working years. You exit this phase when you have built up enough money in your nest egg to survive during your retirement years.
This phase will take approximately 40 years to complete; you will need every minute of those forty years if you want to have a successful mission.
If you fail at the accumulation phase your only choice when you reach your retirement years will be to continue working.
Winning At Phase One
This phase does not happen by itself; it takes dedication from you. You will need to have the desire to win. You will need to focus.
Build It|You Will Come
You will need to be personally involved in building up your retirement accounts. You will need to do whatever you can to grow your investments. Investment growth will be determined by the markets plus your investment choices. Choose wisely.
The greater the risk of an investment, the greater the reward or return. Be careful, do not choose investments that are so far out of your risk level comfort zone that you lose sleep at night. Find the balance between risk and comfort that you can live with.
A young investor generally can afford investments with greater risk because they have a longer period of years left in the market; therefore, they have years to rebound from market swings.
An investor closer to retirement may “want” to choose risky investments because they tend to increase in value quicker; but that is not always to best choice. If the market takes a downward turn and an investor close to retirement did not change their investment choices accordingly, they may not have the time to stay in the market for a correction.
Change Your Habits|It’s Good For You
To save money you need extra money. The best way to find extra money is to change your spending habits. A change in spending habits means that you will need to spend less. You will have to delay gratification and postpone useless, frivolous purchases. You will need to learn the difference between good purchases and wasted purchases.
You will be investing the money you save from better spending habits into your retirement accounts. The more spending you can delay or avoid, the more money you will have to pay-forward to your retirement.
Phase #2 – Your Preservation Phase
Your preservation phase is sometimes called the distribution phase.
In this phase your mission is to protect your investment money. You worked your entire life to save enough money to retire, you need to protect that money. You need your investment money to last as long as you do.
Other than beating inflation, you are not as interested in the growth of your investments during this phase as you were during your accumulation phase. You just want to preserve your money, you just want it to last for as long as you do.
Complete Phase Two Still Standing
Shoot For Less Risk
To make your money last longer you will be choosing less risky investments during your preservation phase. You will invest more money into low risk, low returns instead of high risk, high returns.
Although it may be tempting to invest in high risk investments because of the quick increases, it’s best to fight back those temptations. If the value of your investments drop instead of increase, where will you get the money to live on.
Your Spending Habits Still Count
You cannot over spend during this phase like you sometimes did during your accumulation phase. You are living off of your investments now, not a paycheck. You cannot ask for a raise and you will not be getting bonuses like you did during your working years.
Get A High Credit Score
If you will need to make large purchases during this phase, you will want a high credit score to help attain a lower interest rate.
Congratulations are in order if you make it to retirement on schedule, you will be rare. Many people do not plan ahead; some people think folks who retire are lucky. You know the facts though, you know that it takes dedication and hard work to plan for your retirement.