Get Financially Prepared to Retire: Here’s How

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If you’re an investor and saver with retirement on the horizon, you know better than most that preserving and growing your income is the key to making your money last. Even with a plan in place, it’s wise to be vigilant about your saving, since people are living longer than ever before. About 25% of those who are at least 65 already will live past age 90, according to the Social Security Administration. Many unknowns – including a potentially long retirement – can contribute to a growing concern over finances, which includes the cost of healthcare and changes in the economy.

There are many routes to the goal of financial self-sufficiency in retirement, and determining the best one for you is a unique decision. No matter what stage of life you’re in, now is a perfect time to do a retirement plan check-up, and consider new savings and investment tactics available for building and maintaining your retirement nest egg.

Look at Different Investment Types

Diversifying your types of investment and savings vehicles is one of the smartest actions you can take, according to Investopedia. Pouring all retirement funds into one investment type disproportionately impacts your money when you need it most if the market factors are unfavorable at that time. Those who were heavily invested in stocks at other banks during 1987, 2001, or 2008-2009, for example, keenly remember the bottom dropping out of the market and personal wealth falling along with it. However, those who avoided the stock market on its subsequent rebound missed incredible growth opportunities, according to reports.

Consider Certificates of Deposit

Putting your money in a certificate of deposit (CD) restricts access to the funds until the fixed maturity date, but maintains a guaranteed interest rate for the duration, according to Investopedia. Plus, money in these investment vehicles backed by the FDIC up to $250,000 per person listed on the account (Actual amount may vary. Visit for more information).

Is a Money Market Account a Good Option?

If you’re holding cash in a bank account and may need it for something in the near future, it’s a good idea to keep it liquid and accessible (instead of restricted like a CD). Bankrate says that one option to consider is putting the funds in a money market account. While the minimum balance requirement may be higher than a regular account, as NerdWallet puts it, the interest rate may be higher, and your money will be available to you if you need it.

Diversity With Bonds

Whether you choose a bond mutual fund or individual bonds, both can provide a predictable income stream from interest (unless they are called), while also preserving your capital investment, MarketWatch indicates. Many investors like to purchase bonds partly because bonds can help mitigate stock losses, and also because bonds are an easy way to diversify equity risk in a portfolio.  Bonds of course are subject to risks just as are stocks.  The value of a bond typically falls as interest rates rise.  Some bonds are subject to “call,” meaning you have to return them and receive their market value which may be higher or lower than at time of purchase.

Catch up With an Annuity

An annuity may be able to provide a measure of guaranteed, steady income starting at a date you choose when purchasing this insurance product, according to Investopedia. The money grows tax-deferred, and there’s no limit to how much you can contribute to an annuity for retirement. This can be especially helpful for those who feel they’re behind on retirement savings. There are fixed annuities and variable annuities. Certain annuities or types of annuities may be more appropriate for investors depending on their individual circumstances.

Find Growth With Mutual Funds or ETFs

Stocks have the potential to grow your wealth, as long as you choose the right ones at the right time. Rather than investing in individual securities, though, U.S News points out that you may want to grow your assets using mutual funds or exchange traded funds (ETF) focusing on stocks. Plus, the fees are usually lower than buying and selling specific stocks, and you can diversify based on sector and risk profile.  On the other hand, some investors have the time and expertise and prefer holding individual stocks, which may pay dividends.  Make sure you read the prospectus carefully for any mutual fund you are interested in prior to purchase.  The prospectus contains the investment objectives, risks, and charges and expenses associated with it.

Set Yourself up For Success

No matter how you choose to grow your retirement savings, don’t forget to consider any fees charged for managing and purchasing your investments, which can eat into your growth. For example, mutual funds and ETFs have fees included in their net asset values, and financial institutions may charge a commission to buy or sell mutual funds and ETFs. Managed accounts typically charge an annual fee based on the assets in the account.  Annuities involve charges such as mortality and expense fees and investment fees and expenses, and may have surrender charges as well as commissions or concessions for purchase or sale.  On the other hand, look for quality options available with lower fees, which can also provide returns for retirement income.

Making smart investment and banking decisions now can help give you an advantage in your retirement years. Be sure to speak to a financial expert to learn more about which investment options make the best sense for you.

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