Where to Begin Your Financial Retirement Planning?
For many people, retirement seem impossible as the economy continue its decline. However, if you are concerned about the financial security of your retirement years, you have to be serious about financial retirement planning. Financial retirement planning is an important first step to ensure that the lifestyle you’re dreaming of living at retirement will have a better chance of becoming reality.
You’re never too old to start your financial retirement planning, but begin as early as you can. You will have a better chance of reaching financial security in your retirement if you begin at age 30 rather than age 60. Creating a financial retirement plan helps you recognize what you need to do in the present to secure a successful future. If you don’t have a plan, future issues can become bewildering when you have to confront them and you won’t have a clear-cut course to take.
The first consideration for your retirement savings plan will be where your investment money will go and for how long. As a basic strategy, you should invest some of your money in short term investments, medium-term investments and long term investments. The type of investment usually is determined by your time horizon. Generally, the more time you have before having to sell off the investment for cash, the more risk you can take with your investments.
With long term investments (investments held for more than a year), you can choose investments that appreciate over time such stocks and real estate. Growth stocks and real estate are good long term investments if you have many years left before retirement. Volatile stocks or CDs are considered short term investments, investments that are held for a year or less, and should be reevaluated several times a year.
Times are different – you can no longer take the retirement planning advice of an investment adviser as gospel when it comes to financial retirement planning. You need to educate yourself and take charge of your money.
If financial matters seem terrifying to you, there are many well-written books that explain the difference, for example, between stocks and bonds and other financial matters. Short-term college classes abound with information you can use to set financial goals for your retirement. There are plenty of retirement planning tools that will make planning for your retirement needs easier to understand. You just need to do some research to create the best retirement plan for your situation.
You don’t want to find out too late that you don’t have enough money to cover your retirement needs. You must educate yourself to gain an understanding of what is possible with the money you invest. Generally, a balanced retirement savings plan should include investments in treasury bills, money market and savings account to provide accessible cash; stocks in small, medium and large companies for growth and appreciation; and other investments such as real estate for long term appreciation.
Financial retirement planning should take into account when you plan to retire or the number of years you have to grow your investment. If your retirement is only one to five years away, you may want more of your funds invested in investments that can be readily converted to cash while providing a somewhat steady and predicable return. With a short investment time line, you don’t want to be at retirement with most of your funds in investments such as penny stocks that just went through a major decline that eliminated a big portion of your money and you don’t have enough time for the investment to rebound.
If you do have many years before retirement, aggressive stocks and real estate can be a sound investment. Your nest-egg may growth faster with this investment strategy because the funds are shielded from certain taxes, and because real estate is a good hedge against inflation.
Financial retirement planning is really just common sense. Get educated about money and make knowledgeable decisions and then review your results on a yearly basis. Don’t be alarmed just because a stock goes down in value once in awhile. This is the nature of investing – stocks go up and they go down in value. If you’re on a long term plan, stick to the plan and the ups and down should all even out over the years to provide for your retirement needs.