Tuesday, August 16, 2016

Four Things To Consider For Successful Retirement Planning

Retirement planning is important. Of course, you know that; but that doesn't make it any easier. For one, it is difficult to plan for something you have no experience with. 

For another, thinking about that stage of your life can already be stressful enough. But no matter how difficult it may be, it is, indeed, quite necessary.

And so, with that in mind, here are a few things to remember as you begin working with Rothenberg Capital Management.

Longevity


Obviously, your plan needs to attempt to take into account how long you will live after you retire. 

Modern health advancements and better awareness means that people are living longer these days—even three or more decades past the age of 65—and you will need to account for your lifestyle over those final years. It could be very easy, then, to outlive a savings account without thoughtful and careful planning



Furthermore, the average government pension benefits—at least, right now—falls just shy of $1,666 a month. 

Even for a full-time working adult, this is not enough to live comfortably in most cities. Thus, effective retirement planning will probably require some kind of dividend interest or annuity account that yields more money over time.

Inflation


While sticking money into an account and letting it mature is a pretty simple concept—and easy to accomplish, for the most part—it becomes increasingly important to consider how inflation will affect your money down the road. 

Since most retirement plans take several decades to mature it can be exceedingly difficult to anticipate the value of your money when you plan to use it.

For example, an inflation rate of 2% would lower the value of an initial $50,000 investment to only $30,477 after 25 years. At the same time, though, something that costs $50,000 today might cost more than $82,000 in the same 25 year period. 

 Yes, it is complicated; unfortunately, it is necessary to learn how to account for all these things—or hire a professional to help you—in order to make sure you cover all your bases.

Volatility


Similarly important as understanding and accounting for inflation, you also need to have ultimate awareness of market volatility. Volatility is the term used to describe the consistent—and sometimes unpredictable—fluctuations of market activity over time. 

Volatility may be easily managed by a high-activity trader with a diverse portfolio who can move, buy, and sell shares several times a day.



Stock investing, though, can be a profitable aspects of retirement planning, despite how uncertain they can be sometimes. And, despite how it might feel at the time, history consistently shows that markets typically recover—but it can take some time. 

For example, right now, data shows that the market has demonstrated positive annual returns 80 percent of the time over the past 35 years; showing an average intra-year decline of about 14 percent.

Balance


Okay, so you have determined how much you think you need and which accounts and investments you think will yield the best results. Your money has been maturing over a decade or so and you are approaching retirement. 

How much can you comfortably withdraw from your retirement account while also maintaining your steady growth?

This probably sounds complicated—and it can be—but it doesn't have to be stressful. In fact, this is just another part of planning. And then you have to be disciplined in how much you withdraw and how you use your money.


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