How To Plan For Retirement When You Are Almost Retired

It is never too late to start saving for retirement even when it feels like a monumental task and an uphill battle. Investing over 50 is not impossible but it requires strict planning and consistent execution to ensure you have what you need for financial security when you retire.

What Is Needed?

Speaking with an investment professional or other financial expert might be appropriate when determining how best to tackle the retirement problem. Investment professionals may be able to offer suggestions and outline a detailed plan to achieve retirement goals. It may be worth the money to have an expert explain what is needed to make sure you don't outlive your money and still enjoy your golden years.

During the analysis and investment professional will provide detailed information about your goals, expenses and the possibility of unforeseen circumstances to determine how best to allocate resources. If you like to travel or if you have a small hobby that requires limited funds, that is information which a professional can help determine how to maximize existing assets to plan for the future.

Portfolio Re-balancing

Younger investors who are planning for retirement in their twenties and thirties are able to assume more risk than older investors because they have many decades of earning potential to make up any significant losses. It is common for younger investors to have a large portfolio dedicated to equities which can lead to significantly higher returns but can also lose a large portion of principle.

If you're close to retirement, a common portfolio for older investors may include more income earning assets and less equity exposure but it may not provide the types of returns needed for long-term growth. If if an individual investor only has 5 to 10 years of top earning potential prior to retirement then an annual portfolio rebalancing is recommended to shift assets with lower performing returns to better performing investments.

Maximize Contributions

In addition to re-balancing your portfolio to be more weighted in equities which would normally be recommended to make up lost ground, one of the easiest things to do is to pay yourself first. By maximizing your company's contributions to a 401(k) plan it can significantly help boost the funds available at retirement as well as assist in adjusting you to living on a reduced income prior to it becoming a necessity.

Investment Costs

While it may not seem like a big deal in an overall investment strategy, minimizing costs can be just as important as maximizing returns. With the growth of online brokerage firms and no load mutual funds it is no longer necessary to see your money disappear into thin air. Maintenance fees and other expenses over the years can quickly eat away at principle. Shifting assets and switching brokerage firms can lead to significant savings if done correctly.

The Safety Net

Retirement accounts and equity holdings are never going to be as liquid as cash in the event of an emergency. While a safety net is always recommended for any one of working age it is more important if a significant portion of an individual's assets are tied up in inaccessible investments. When you retire it will become more important to have cash on hand if a majority of your portfolio is dividend paying stocks, bonds or mutual funds.

Taking an early distribution from a retirement account or liquidating equities which may be below your purchase price if often not necessary when a safety net is available. Six months of living expenses is often recommended which will hopefully provide enough time to pool resources from other areas while avoiding possible penalties or losses.

Summary

Retirement is about spending quality time with friends and family, traveling and doing what you love. Even older investors close to retirement still have an opportunity to take steps ensuring financial security and a high standard of living. Re-balancing your portfolio, maximizing retirement contributions, building a nest egg, minimizing investment costs and speaking with investment professionals are all important steps to make up lost ground in a short period of time.