Saving for retirement isn’t what it used to be. Everything has increased in price and it’s making retirement look a little more expensive than what we expected it to be a few years back. Don’t worry — there are a few retirement investment tips that can help ease your way into funding your retirement.
Financial Strategies for Retirement
Stay Ahead of Inflation
With inflation, expenses in retirement may be higher than you expected them to be. The cost of food, rent, activities and more are all increasing, and inflation may be part of the issue. Try to plan ahead as best as you can by trying to save a little bit more than you normally would. Find different streams of revenue that may help you plan for the future like investing in annuities or saving more in your 401(k). Stocks may provide higher long-term returns, but be aware that they also involve higher risk of volatility and loss.
Your Time Horizon
Think about what your long-term goals and plans are when it comes to your retirement. Setting retirement goals now may help you work towards retiring. Investing your money now may help you prepare for later on in life. If you’re employer offers a matching 401(k), you should consider taking advantage of this.
Investing in stocks may also bring you some extra income later. There is higher risk with the stock market, but learning how to properly invest can help. Putting money into an annuity may also help you lock in your investment for a certain amount of years. Do your research and look into the annuity timeframe and rates to determine if it’s a good investment. If you’re younger, thinking long-term may not be at the top of your list, but your older self will be thankful you did. Whatever stage of life you’re in, finding ways to plan for the future years can help make a difference.
Consider Your Risk Tolerance
Now, finding the right investments and actually investing money to help your retirement fund can be rewarding, but know your risk tolerance before investing. The financial market is always changing and there will be times when the market declines. If you are someone that will need their retirement funds within the next couple of years, your risk tolerance most likely be low. You may need money soon and don’t have the luxury to invest at a higher risk. If you’re younger and probably won’t need access to your money until later, you may have a higher risk tolerance, and this will allow you to invest more aggressively.
Fund Your Other Financial Goals
Saving for retirement can seem like too much when you have other financial goals to meet prior to retiring. Find the right balance and what is doable for you at this moment. It’s possible to save for retirement while saving for other things like your child’s college fund or that dream vacation. Prioritize your top goals and work towards what’s most important like your retirement income — this includes your day-to-day spending such as bills, groceries and mortgage. Once you figure that out, then you can plan your other financial goals. Setting up an emergency fund can also help you for those unexpected financial obligations that come up. Setting aside this money can give you a little assurance especially while you’re trying to save for other financial goals.
Spread Your Risk
When you are investing for your retirement — and really with any type of investment — there is always a market risk. Diversifying your financial portfolio can be a helpful retirement investment strategy to avoid the impact of risk with your investments. However, if you’re not sure how to do so, reach out to a professional or do your research and learn how to do so properly. Diversification may help prevent your assets from being impacted by financial risks and allow your investments to reach their full potential. Market volatility can affect your retirement and change your financial plans, but there are steps to take to protect your retirement funds from a market downturn.
Protecting Your Investments
Figuring out what your retirement investments should look like isn’t a task you wish to take on yourself. Let a Farm Bureau agent help you plan for your retirement.