Everyone wants to live out their retirement in comfort. But your retirement planning needs to start early because the average life expectancy keeps increasing. Still, you can reach your investment goals with professional retirement financial advisor services.
However, most Americans don’t plan their retirement at all. According to a new report, 40% of older Americans rely only on Social Security income in retirement. Only 7% receive retirement income from Social Security, a defined benefit pension, and a defined contribution account. It is considered an ideal situation.
Social Security benefits will replace only 40% of your retirement income. In other words, you will need a pension account, savings, or investments to support your retirement income.
Let’s take a look at how you can invest for your retirement.
Understand Your Investment Options for Retirement
When it comes to retirement, you usually have two options – retirement accounts and investments. They both come with unique benefits and drawbacks. Most financial advisor services will recommend you have a balance of both.
1. Retirement Accounts
You can choose from different tax-advantaged retirement plans called Individual Retirement Arrangements or IRAs. Unlike taxable investments, IRAs offer a tax deduction on your investment. Plus, you don’t have to pay taxes on your income.
Also, most IRAs have lower investment fees. And most importantly, you have plenty of investment options other than your 401(k). That’s one of the reasons many retirement financial advisor services encourage investing in retirement accounts.
Here are a few retirement plans other than the traditional 401(k).
- Roth IRAs
- SIMPLE 401(k) Plans
- 403(b) Plans
- SIMPLE IRA Plans (Savings Incentive Match Plans for Employees)
- SEP Plans (Simplified Employee Pension)
- SARSEP Plans (Salary Reduction Simplified Employee Pension)
- Payroll Deduction IRAs
- Profit-Sharing Plans
- Defined Benefit Plans
- Money Purchase Plans
- Employee Stock Ownership Plans (ESOPs)
Flexibility and liquidity are the two distinct advantages of most investments. But you’ll not get a tax break on your investments. You will pay taxes on capital gains and income. As you can see, most brokerage and bank accounts are taxable. It’s best to consult financial advisor services to choose the investment options best suited for your needs.
Another advantage is that investments come in various shapes and sizes. You can start investing small amounts and work your way up as you go. Here are a few investments you can think of when planning your retirement.
- Mutual funds
- Exchange Traded Funds (ETFs)
- Dividend Reinvestment Plans (DRIPs)
- Real Estate Investment Trusts (REITs)
Of course, different investments offer different benefits and drawbacks. Study all your options carefully before investing.
3. Invest as Early as You Can
Whatever investments you make; all professional retirement financial advisor services will have one common advice – start early. The life expectancy for men and women above 65 has increased significantly in recent years. Now men in the United States aged 65 can expect to live 17 more years on average, while women can live around 19.8 more years on average.
If you start investing early, you can build your account value. The compound interest means you can reinvest your earnings continuously to create a sizable retirement account. Plus, you will have more time to recover from potential losses. That allows you to invest in high-risk/high-reward investments.
4. Determining Your Retirement Goals
Next, you will need to determine your retirement goals. And that starts with a thorough assessment of your current financial situation. You will need to figure out how much you will need to secure your retirement. Plus, how much money you can and will need to put aside. That’s something your financial advisor services experts can help you figure out.
However, remember that this is not an exact science. You will need regular net worth check-ups to track your progress. You may need to optimize your investment strategy repeatedly to reach your retirement goals. That’s why having an expert on your side can help.
5. Keep Your Emotions in Check
Emotions tend to influence almost every aspect of our lives. As a result, you are most likely to make investments based on your emotional impulses. But that will cause more harm than good to your retirement goals.
It is in the nature of investments and markets to fluctuate. But you don’t have to get scared when your portfolio goes down or be overconfident when it goes up. If you do, your investments will suffer losses, and you can’t benefit when the market recovers.
The bottom line is to keep your emotions in check. One way to do so is to diversify your portfolio based on your risk tolerance and retirement goals. Above all, keep changing it as the market changes. And professional retirement financial advisor services will help you do it.
6. Work with Professional Retirement Financial Advisor Services
As mentioned consistently throughout this post, you need sound retirement financial advisor services by your side. For starters, your investment advisor can help you figure out your retirement plan, including how much money you need to invest. They can identify and research suitable investment options for you.
But more importantly, they can closely monitor your portfolio to track its performance. This helps you reach your retirement goals more efficiently. But be sure to find an experienced and trusted advisor who can customize a plan to match your needs.
Retirement planning should be your priority. Only proper planning will help you ensure a comfortable retirement for you and your partner. And that involves understanding your investment options, determining tangible retirement goals, investing as early as possible, and keeping your emotions in check. And lastly, you need to consult a professional financial advisor.
Are you looking for financial advisor services? Koss Olinger is one of the leading wealth management firms in Florida. Call us or fill out the online form now!