5 Tips for Planning for a Successful Retirement

Retirement.  It might not come tomorrow, but every day you work the closer it gets.   The real question is what are you doing to ensure a comfortable life after work?  Well, here are five tips you can look at today to ensure you have a successful retirement.

  1. Have a Plan

A successful retirement does not happen on its own. To get there you need to have a plan.  This includes looking at how much you are making today, how much you are spending today, and how much you will need in the future.  One of my favorite tools to help with this is this retirement savings calculator from Nerd Wallet.  I really like it, because this tool takes into account variables such as your age and the impact of inflation.   The importance of going through this process is that it will give you a clear idea of the steps you need to take to make your retirement a success.

  1. Take Good Look at Your Portfolio

The first step is having a plan.  The next step is executing that plan.  This starts with looking into your portfolio.  Which investments are too risky?  Which investments are nor delivering the desired returns?  Which funds or managers are charging excessive fees.  You also need to work out what is your tolerance for risk, and what will you do if the worst case plays out.

Another item to take into account is called the ‘all-in cost’ which looks at of the costs associated with a particular investment.  You would be surprised how quickly management fees add up, so take this into account when you looking at your portfolio.

Are you a collector?  Maybe you like classic cars or you have gold coins.  Either way, check the value of these collections and make sure they are properly insured.  In addition, is the market in a downturn or is it at or near historic highs?  In some cases, it might make sense to sell part of your collection and move the funds into another part of your portfolio.

  1. Home Sweet Home

 For many people, their house is the most valuable asset they own.  This makes sense.  You spend your life saving up to get a home and then to pay the mortgage.  But if you are over 62, then you might be able to tap into the equity built up in your home without having to pay taxes or increase your monthly payments.

Does this sound like magic?  Well, it is not.  It is called a reverse mortgage, and they have been around since the 1960’s.  In fact, reverse mortgages are a great way to freeze your mortgage payments or tap into the equity you have built up in your home.  In you want to find out more about reverse mortgages then check out the Information Blog at Reverse.mortgage which does a pretty good job answering many questions by concern or visit HUD.gov.

  1. Social Security

Believe it or not, this is the fourth tip.  I know the program has received a bad reputation in recent years, and it certainly cannot be your only option.  But Social Security is a great program to augment your post-retirement income.

One of the best tips is to delay benefits for as long as possible.  For example, delaying receipt of benefits until the age of 70 can increase your monthly payments by more than 30%.  Now, this approach is not for everybody.  Some people will need to collect Social Security as soon as possible, but if you can then this could be a smart play.  Another benefit of postponing Social Security is that the survivor’s benefit for your spouse will also increase.

  1. Don’t Touch Your Retirement Fund

I know it is called a retirement fund.  But to ensure that the fund remains intact, you want to consider ways to leave the principal alone.  Look, we are all living longer and healthier lives, so leaving the principal in place will pay off in the long-term.

The best way to accomplish this is to move your portfolio into investments with guaranteed returns.  Whilst this does not mean that all risk has been eliminated from your portfolio.  You want to look for investments with pay a regular dividend.  Then either reinvest those dividends or use them to finance your retirement.  In this way, you can basically leave the principal of your retirement portfolio alone.


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September 29, 2016 5 Tips for Planning for a Successful Retirement