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Biggest threats to having the retirement of your dreams

Retirement is something most of us think of as the end of the journey when it really the beginning of our second act. Living well in retirement requires planning, hard work and avoiding activities that can impact how we live in retirement.  Avoiding a few common missteps can help keep you on the road to the retirement of your dreams.
What is the biggest threat to having the retirement we want?
The biggest threat would be not saving enough.  This can be caused by not starting earlier enough or not saving enough when one finally starts saving for retirement. This becomes even more of a threat because we are hopefully all living longer so we have to plan to save even more.
Are there other factors besides not saving enough that can be an issue? 
One of the big issues besides not saving enough in retirement is unexpected expenses that come up while you are saving for retirement that might require you to stop saving for a period of time.  This lost time is invaluable when saving for retirement. The best way to help keep unexpected expenses from hurting you is to build an emergency fund while saving for your retirement.
What about how you invest your retirement portfolio?
Failure to diversify properly can impact the performance of your retirement savings.  You need a proper balance of different types of investment vehicles so that you have a balanced risk profile.  Another common mistake is to overreact to market swings and pull out of investments when they are the lowest point.  Both actions are serious threats to achieving the savings goals for retirement.
How about borrowing against your retirement funds or pulling funds for retirement instead of borrowing?
This is one action that is highly discouraged. Even if you eventually pay back the loan to your 401k, you will have lost so much time that your portfolio performance will be severely hampered.  Make this action one that is the very last resort and exhaust all other avenues of finding a loan first.
What are actions to avoid when getting within five years of retirement?
One of the biggest is taking on more debt that will carry into retirement.  Determining your post retirement budget will help you determine the appropriate amount of debt to have going into retirement.  Generally less debt is going to be the recommended strategy.  And attempting to have your home paid off prior to retiring is another important move to help the cash flow during retirement.
What are other factors to consider when nearing retirement?
Two of the most important are the date you are actually going to retire and the second one is determining how you will pay for medical expenses in your post retirement life.  Both of these decisions are critical to having the retirement you covet.  Another important decision is when to start drawing social security.
What else can one do about medical expenses in retirement?
Two easy ones are…first don’t ignore your health, develop a healthy lifestyle now and continue in during your retirement years and the second action is if you have an HSA, fund it to the max so that you can build up a fund for health insurance costs in your retirement years.
Smart planning starting early in life can help you have the retirement you have always wanted without the worry of running out of money.  Avoid the common threats and you have a great chance of living your retirement dream.

Posted: 6/18/2015 with 0 comments

Categories: Money Matters, Planning, Retirement

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