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Is running out of retirement money a fate worse than death?
The Allianz survey says 31 percent aren't sure what their expenses will be in retirement and 36 percent have "no idea" if their income will last. Prudent planning includes having a clear understanding of two crucial numbers: what will your expense be in retirement and how much money will it take to support that standard of living indefinitely into the future.
One of the biggest mistakes I see people make is to assume these numbers are "unknowable". That isn't true. It isn't mysticism; It's math. These numbers aren't very difficult to figure out and there are plenty of tools out there, including ours, which you can use to do it.
Granted, you will have to revisit them periodically. Things change. Assumptions prove to be more or less correct over time. But the closer you are to retirement, the more accurate these numbers will be. If working this out on your own really and truly makes you pull your hair out, Take a retirement planning course or consult with a qualified retirement planner to help you.
The key is not to retire until you have accumulated as much money as you will need to support the lifestyle in your plan. Retirement savings are a function of four variables: income, expenses, time and after-tax return. If you see, in advance, you can't get there, you will either have to increase income, reduce expenses, make your money work harder and smarter or work and save for a longer period of time.
Here are five easy action items you can take now to reduce the chances of running out of money in retirement:
1. Carefully track your expenses, using a program like Quicken or Mint, so you start with reality when projecting expenses forward into retirement. If you are not doing this already, download or register for one of these super-easy programs today. The more powerful Quicken will set you back a few bucks but Mint is free.
2. Avoid bad debt. If you have it, pay it off as soon as you possibly can. Those interest payments would go a long, long way in retirement. If you need help creating a plan to get rid of your bad debt, see our previous article entitled, " Title and NASDAQ link here."
3. Don't make the mistake of being under-insured. Too many people think they can rely on their savings, their spouse's income or their kids if they become disabled or need long-term care. If you think you may need disability or long-term care insurance, set up an appointment with an insurance expert today. Hot Tip: You may have a life insurance policy that is no longer needed that can fund the new policies.
4. Invest your money for cash flow instead of capital appreciation. We think it is blindingly obvious cash flow investing is much better suited to a retirement portfolio than a traditional portfolio of stocks, bonds, mutual funds and annuities. Don't know what cash flow investing is? You are not alone. Download the free special report, "How to Not Just Survive, but Thrive, in Turbulent Financial Markets."
5. Become your own portfolio manager. You are the only person who has no conflict of interest when it comes to your money. Moreover, the reduction in fees represents the easiest risk-free return you will ever earn.
Maybe you are reading this and thinking to yourself, "It's too late for me!" There is an old proverb: "The best time to plant a tree is twenty years ago. The second best time is today."
Make it a goal to do one little thing each and every day that will have a positive impact on your retirement savings and how long it will last. If you aren't sure where to start, start with a financial education.
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Simply Money: Retirement Planning Checklistby SimplyMoneyMedia84 views
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