Planning for your retirement is an important part of your overall financial plan. Americans are living longer and longer yet saving less and less every year for those retirement years. It’s hard to think about reaching retirement age when you still have a growing family that has growing needs and you are watching the costs of sending them to college going up and up with no end in sight but you must think and plan for those retirement years starting now.
First you must determine what your income needs will be once you retire and enter your “Golden Years”. Could it be 50% of what your income is now…or 75%? What expenses will continue and which ones will be reduced or eliminated entirely? Do you know?
It might seem ridiculous to go to a professional financial planner while you are still in your 30’s and it’s taking most of your income to just meet the monthly bills but you would be very wise to do that very thing. You need to make investments now to insure a secure financial future for you and your family. It isn’t too early; don’t let it become too late.
Your assets need to be diversified. Allocate your assets among cash reserves, bonds, annuities and stocks. Build a guaranteed income into your portfolio. Each person’s situation is different.
Protect your assets with insurance. You, of course, must have health insurance, life insurance and your home needs to be insured, too, but you might, also, consider long term medical care insurance. If you buy into a long term care insurance plan at an early age, your premiums will be very low and your coverage will protect your assets when or if the time comes you need it.
Retirement may be a long way off for you – or it might be right around the corner. No matter how near or far it is, you’ve absolutely got to start saving for it now. However, saving for retirement isn’t what it used to be with the increase in cost of living and the instability of social security. You have to invest for your retirement, as opposed to saving for it!
Let’s start by taking a look at the retirement plan offered by your company. Once upon a time, these plans were quite sound. However, after the Enron upset and all that followed, people aren’t as secure in their company retirement plans anymore. If you choose not to invest in your company’s retirement plan, you do have other options.
First, you can invest in stocks, bonds, mutual funds, certificates of deposit, and money market accounts. (This topic has been discussed in detail in another chapter.)
You do not have to state to anybody that the returns on these investments are to be used for retirement. Just simply let your money grow overtime, and when certain investments reach their maturity, reinvest them and continue to let your money grow.
You can also open an Individual Retirement Account (IRA). IRA’s are quite popular because the money is not taxed until you withdraw the funds. You may also be able to deduct your IRA contributions from the taxes that you owe. An IRA can be opened at most banks.
A ROTH IRA is a newer type of retirement account. With a Roth, you pay taxes on the money that you are investing in your account, but when you cash out, no federal taxes are owed. Roth IRA’s can also be opened at a financial institution.
Another popular type of retirement account is the 401(k). 401(k’s) are typically offered through employers, but you may be able to open a 401(k) on your own. You should speak with a financial planner or accountant to help you with this. The Keogh plan is another type of IRA that is suitable for self employed people. Self-employed small business owners may also be interested in Simplified Employee Pension Plans (SEP). This is another type of Keogh plan that people typically find easier to administer than a regular Keogh plan.
Whichever retirement investment you choose, just make sure you choose one! Again, do not depend on social security, company retirement plans, or even an inheritance that may or may not come through! Take care of your financial future by investing in it today.
The economy is tough right now, to say the least. We almost hate to open our mutual fund statements or go online to check the current value of our stocks and bonds because they seem to be headed straight down.
There is one asset, however, that may be worth more than you think it is and that is your life insurance policy.A life insurance policy is an asset that can be turned into cash. There is now a secondary life insurance market in today’s marketplace.
Institutionally funded provider companies purchase policies from seniors that they no longer want or need.
We, as seniors, can go through what is called a “life settlement valuation” to determine the value of our policies.
This is not for everyone but it could be right for you.
A life settlement only works if the insured person is 65 years old or older and the minimum face value of the policy is $100,000.00 … and some companies will only purchase policies with face values of $250,000.00. Men who are 75 and women who are 78 and own policies with face values of one to 10 million dollars are more likely to get solid purchase offers.
You will need to verify that the policies are in effect, assess the reasons why the policies were purchased and then decide if the reasons are still valid, hire a licensed life settlement broker and then evaluate the offers that are received.
This whole process usually takes 4 to 12 weeks depending upon the complexity of the policy and medical history of the insured.It takes all of 30 minutes to complete the forms and about an hour to be educated to be able to convert this previously overlooked asset into cash. That might be an hour and a hold well spent.