Setting Yourself Up For Retirement: Prepare & Prosper

Unfortunately, most Americans are not prepared for retirement. According to the Employee Benefit Research Institute’s annual Retirement Confidence Survey, more than 54% of Americans report that the total value of their household savings and investments, excluding the value of their primary homes, is less than $25,000, and 27% have less than $1,000 in assets.

That’s not necessarily a good sign. The average income needed in retirement for most middle-class couples is $3,500 per month. In order to pay for 25 years of retirement, a couple would need about $1 million saved up. Thus, we can see the discrepancy between what is needed and what most people have. Although there are enormous benefits to starting early, the good news is that it is never too late to start saving for retirement.

Start As Early As Possible

One of the most powerful keys to retirement planning is compound interest, and in later years, compound interest has its most powerful effects. It is ideal to begin retirement planning when you enter the workforce in your mid-20’s. Starting young will allow an investor to take greater risks in the early years, knowing that there is plenty of time to make up for any incurred losses. Take forex for instance. The only way to become successful in this market is to practice, and then practice some more! Starting early will give you an edge over other traders, and bring you closer to whatever goal you set for yourself.

Make Sure Your Risk Profile Is In Line With Your Age

Your risk profile should evolve through the years and this is very important. If your risk profile at 45 is the same as it was when you were 30, that may be a problem. In your younger years, as mentioned in the previous tip, you were able to bounce back from temporary set-backs, but major losses in your late 40’s and 50’s could be very difficult to recover. Make sure you reduce your exposure to risk as your assets climb in value and your age increases.

Be Willing To Curb Discretionary Spending

The key to retirement planning is being able to save money. Finding the balance regarding this issue is essential. On one hand, you do not want to save every penny you make and never enjoy the fruits of your labor in the present moment. It is right to spend money to enjoy life in simple ways. However, it can be debilitating if you get caught into the downward spiral of consumerism. Finding the balance between saving consistently and aggressively, and still enjoying life is essential.

Don’t Enter Retirement With Debt

Your goal should be to be completely debt free in retirement. Debt may be needed in your younger years to finance education and a home, but it is best to adopt a very strong hesitancy to take on debt in your adult life. This will allow you to be completely debt free while still in your 40’s or early 50’s, and this will allow you to live much more comfortably in retirement. If you are in deep debt and beginning retirement planning later in life, a financial advisor should be able to help you decide on a game plan of how to tackle the debt and prepare for a debt-free retirement.

Forex news updates give insight into economic activities around the world, and world governments are wrestling with this same issue right now.  Just because the government releases stimulus and encourages spending does not mean you need to.

Take Care of Your Health

This is one of the most overlooked elements of successful retirement planning. If you live a healthy adult life, you will still be full of vigor and energy in your later years which will help you either work a few extra years, which will add tremendous value to your retirement portfolio, or enter a new, enjoyable part-time career in retirement that will help tremendously with cash-flow.