Retirement can be the time of your life or the time of unfulfilled dreams. Having adequate resources can make the difference.
While it may seem like an insurmountable challenge to save those resources, there are a number of small things investors saving for retirement can do that add up to a significant increase in spendable income and a marked improvement in your retirement.
To start, understand how you are spending your retirement dollars. Whether you call it a budget or a cash flow, you need to keep track of what you spend. Track it with pencil and paper, computer programs such as Quicken or online tools like mint.com.
Once you have a grip on how much you’re spending — and where you’re spending it — look for better deals on the things you’re buying. Many investors are surprised by how much can be saved simply by comparison shopping for services. You can save hundreds per year by shopping around for banking services that fit your needs without charging for extras. Comparison-shopping your property and casualty insurance can also save hundreds of dollars each year. Contact a reputable insurance broker and have him or her compare your current insurance program.
Investment costs are another area to look at for savings. It is crucial for you to have a good understanding of all the fees (commissions, sales load, deferred charges, redemption fees etc.). Big brokerage firms can be costly and you may be over-paying for services. One of my clients recently reduced asset management fees by $3,500 a year after switching brokerage firms.
Still, it’s important to beware too-good-to-be-true offers. Be cautious about an invitation for a free lunch to learn about “an investment that can never go down,” “earning extra money from your home” and “long term care without paying for it,” for example. These meetings are always trying to sell you something. If you don’t understand it, avoid it — or it least seek a professional second opinion (from someone who’s not selling the product).
Don’t be the victim of scare tactics. And don’t let salesmen take advantage of you, even if you are a apprehensive about the recent economic havoc. An 83-year-old client was recently sold an annuity at her bank and she cannot get all her money back until she’s 97, which is totally inappropriate.
In order to make your retirement nest egg last as long as possible and produce as much income as possible it is crucial to have the proper mix of different types of investments. The best allocation for you is dependent upon your goals and timeframe, your risk tolerance and your capacity for risk. Unfortunately reaching the best allocation can be complicated but getting objective, conflict-free advice is the best way to go about it.