It always comes as a horrible shock when individuals who are ready for retirement discover that they don’t have enough saved to live comfortably once they stop working. The average social security check is a pittance when compared to today’s high cost of living and the cost of groceries, healthcare and utilities are more expensive than ever. However, it is possible to build up a nest egg if you follow a few tips for planning ahead as you approach retirement age.
Adjust Your Savings for Inflation
When you start planning for your retirement, one factor you cannot fail to take into account is inflation. This can affect the amount you will need to live comfortably as soon as five years from now. As you save, you will have to adjust your earned income and 401K for the fact that the cost of living rises exponentially every year. For example, in 2009, a gallon of milk cost about $2.09 compared to today, where it can cost anywhere from $3.60 to almost $4.00 a gallon. Supply and demand is constantly in flux and there are sharp spikes in cost for essential items, such as the cost of gasoline.
As you plan for retirement, inflation must be taken into account. In addition, calculating your present cash savings and other items of value, such as your home and property, will help you better understand what kind of capital you have presently. The more you understand the value of your assets, the easier it will be to invest so that you can adjust properly for the rising cost of living. Of course, no one can guess the future or how the market or world events will affect prices, but it is always good to have a plan of action.
Understand Your Retirement Goals
You probably already have a dream when it comes to what you will be doing during your retirement, but if you want to save enough, proper planning is the key. Therefore, an understanding of what you hope to achieve after you retire is important. Are you planning on traveling across the country in an RV? Will you go on a cruise, or will you just stay home and devote your time to your hobbies and family? No matter your plans, projecting what they will cost will help you realize whether you have to increase your savings.
Writing down your retirement goals and what they will cost may help you visualize your bottom line. For example, if you plan to travel, calculate such factors as how you plan to travel, what gas or plane tickets will cost and if you plan to make any major purchases after your retirements. Planning retirement goals on paper and tracking changes in your assets will give you a better understanding of how much you might need to invest before retirement.
Seek Out the Assistance of an Investment Specialist
One of the most effective ways to plan for your retirement is to work with an investment company or a qualified financial planner. You may want to consider an individual who has global experience with financial planning, such as Damian Ornani, Fisher Investments president of the company’s private client acquisition and service division, who works with clients throughout the U.S., Japan and the Middle East. The more experienced your investment specialist is, the more angles he or she will be able to approach your retirement savings plans from. Be sure to check out a few online reviews and talk to people who have hired a financial planner in the recent past to ensure you choose one with a positive reputation.
Learn About Safe Investing
You may be worried that investing will drain your bank account or that you will lose the money you have already worked so hard to save. However, what you may not know is that the key to safe investing is to invest conservatively. Investing just a small percent of your IRA or 401K can return sizable gain, and with the help of a shrewd financial advisor, you can learn where to put your money where it will work the hardest. There are a number of safe investments out there, but you must learn about them before you move forward and invest with a reasonable amount of safety.
Have Fun With Planning
Planning financially for your retirement does not have to be stressful. In fact, you can make it fun by sharing your plans with your friends and family and asking about what kinds of experiences they have had with preparing for their retirement. You might even learn what to avoid and pick up additional tips that will make the future a bright and comfortable one.