Monthly Archives:March 2016

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Is Early Retirement Possible?

Is early retirement possible for the person that wants to travel around the world, pursue new hobbies and passionate fantasies or spend time with their family? The answer is in your finances, retirement planning, your lifestyle, objectives and other factors. For early retirement, you would have to factor in all the financial and emotional elements that go into this decision. To find out if you are ready, there are some important questions to ask. Let’s take a look.

Your Finances

How much do you need to retire and how much money is really enough to do so? There is no magic number of how much money you will need to save and invest for early retirement. However, with help from a financial advisor, you could come with up with a plan or technique to even start thinking about it. If all else fails, use the standby rule of 4 percent. What does this mean? It means that you would extract four percent from your retirement portfolio each year and put that aside for early retirement. However, you have to commit to this for up to thirty or forty years.

Withdrawal Approach

You could also consider choosing an adaptive withdrawal approach. What does this mean? This will allow you to consider taking flexible distributions from your retirement account. Once you take care of those essential needs that you have, your financial advisor could look at the remaining assets and adjust its distributions, adapting to things like your age or the performance of your investments. Those withdrawals will have to be sufficiently flexible to absorb any unanticipated circumstances that could occur in the investment market or in your life.  

Access to Cash

If you are going to retire early, you must have easy access to cash. As a matter of fact, you should be able to access an entire year of cash to spend maintaining your lifestyle and paying for expenses. You should also have a year’s worth of finances to cover short term certificates and bonds in your investment portfolio. What it comes down to is the rate of distribution and income objectives. To come up with those estimates, you need to consult with your financial advisor and work out a plan that is best for you.

The Deciding Factors

To retire early, you must have a financial goal and sound planning, using the expertise and experience of a financial advisor who will help to incorporate your plan into the deciding factors so you can have enough funds for long term use.

The Retirement Years

You also want to think about how you will spend your retirement years. How much money will you need to carry out those desires? If you retire early, it means that you will likely be more active because you are going to be younger than the normal retiree. Bear in mind that if you were to do more at that age, it would require more spending to keep up with your active lifestyle. Therefore, speak to a financial advisor to determine if those figures match with your goals and expectations.

 

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How Women Can Stay Ahead of the Retirement Saving Game

Women tend to know exactly what they want and are already carrying out the right strategy or planning for their retirement savings. Many studies have been done to prove this point and it is important to note that up to 11 percent more women will participate in a retirement savings plan at their place of employment than men would likely do. Voluntary enrollment plans consist of 14 percent more women likely to participate than men. For the women participating, 7 percent or higher will save more than men would. Investments made in a five year span showed considerably more returns for women in comparison to men. However, what else can women do to stay ahead of the retirement saving game?

Lagging Behind

Yes, women are certainly surpassing their male counterpart in facets of retirement savings. However research indicates that women are being left behind in aspects where it matters the most and that is in the amount that they are setting aside for retirement. This usually stems from the different levels of income that women have in comparison to men. Even though, we don’t live in a perfect world, it has been documented that men make more money in varying industries than women do. So, this is the reason for the imbalance in income levels. Men who took part in a retirement savings plan at their place of employment typically earned up to 33 percent more income than women did.

The Disparity

Regardless of the disparity, it is obvious that both men and women should put more into their retirement funds in order to live comfortably upon retiring. No matter what your gender, you should save for the latter years of your life. Yes, you will retire because there is no way around that as you age, but you don’t want to do so with any added stress or have to make any drastic changes to the lifestyle that you have always enjoyed. Just a few small changes to the amount of money that you put into your retirement savings can make a whole lot of difference.

Get the Numbers Right

Speak to a financial advisor about how much money you will need to retire comfortably. By running the numbers, you will know how much to put away. As it stands now, many women don’t have an idea how much they should save now for the retirement years. Most of them are going off assumption, which is the wrong way to go about it. Start with doing a projection of your savings in years. Do this for the short term and long term, working out ways that it can be done to meet your retirement goals.

Other Factors

There are several factors that will influence the amount that you need. Your lifestyle during the retirement is one of them as well the plans that you have on how much you will spend at that time. The rule of thumb is saving up to sixteen times what your yearly income is. However, you should include your social security benefits in the number because this is a huge part of your savings. Lastly, for other savings, you should automate the process so that you don’t see it, but it goes directly to a bank account.