Did you get beat up over the last few years in the financial markets, losing money in your 401(k) plan, your stock portfolio or your personal mutual fund? When the tech boom exploded, were you part of the rubble?
So, what do you do now? The market looks better but how do you prevent losing again? After all, saving for retirement is serious business.
First of all, determine when you want to retire. Age 60 is going to require different planning than age 65. How much money will you need?
Will 70 percent or 80 percent of your pre-retirement income really suffice, or will you want 100 percent during your first 10 years while traveling and enjoying new experiences, then slowing your spending after age 75?
And what effect will inflation have on your income? Is 3 percent or 4 percent inflation really devastating if I haven’t planned for the impact?
And what about the issue of diversification? Are different investment models prudent for different ages? And should I adjust my 401(k) plan or keep the same fund choices I have had for years?
How do you put all of these issues together and come up with a savings, investment and retirement strategy that makes sense — one that
is customized just for you? Sound impossible? It’s not.
But creating a successful strategy is not usually a do-it-yourself project. It requires putting together various decision models that you can visibly see and then deciding what course of action makes the most sense. How often should you do this? At least every five years. After
all, retirement allows no second chances.