I'm 54 now and was originally planning on retiring at 65. My 401K took quite a hit a few years ago and now I'm wondering if I should be postponing my retirement.
Hello Nelly, You are not alone. Many people are contemplating the same question. There is no better time than now to start getting serious about your retirement. You have 9 years until your projected retirement date and yes, that may need adjusted depending on what transpires in the market over the next decade. Here are some things you can do now to help increase the likelihood that you can retire when originally planned.
I think you will find that with patience and discipline, you can meet your goals. The key is that you must be realistic with your expectations, make a plan for where you need to be financially, and stay committed to achieving your goal.
A person who works longer, saves for retirement, spends less than they make, and invests their savings in a prudent manner should have more money when they retire than a person who doesn’t do all these activities.
Working with a professional investment advisor will help you personalize how much you save, how much you spend, and how you invest in a prudent manner.
Most people don’t plan on failing, they fail to plan. A financial professional will develop a plan with you and help you achieve the best retirement you could have.
You should interview several different professionals. It is important that you understand how they are paid for their work. You don’t work for free and a professional doesn’t work for free. A professional is paid for their work. Anyone who performs services for free is either engaged in a hobby or doing charity work. Your financial security is not a hobby or charity work.
It’s also important you understand their training, their experience, and their style of working with their clients.
While the stock market dropped 56.5% from its highs of 2007 to its lows of 2009, the market has risen 101.1% from its lows of 2009 to its present value. Working with a professional, you could have taken advantage of this price movement and not let the price movement take advantage of your portfolio.
If you wish for more information, my contact information is listed in BrightScope. Good luck Nelly, Dave
Maybe. The considerations are both financial and non-financial. Working longer will definitively allow you more money when you retire ( VIA allowing more time for your accounts to grow, delaying social security for a higher benefit etc..) but it's not just about the money its also about being happy. If you enjoy your current work, most of the time, it would seem to make sense to delay retirement. If you are miserable at work, it might not be worth enduring more daily pain for extra money when your in your 70's... it all depends. An analysis can be done that might help quantify how much more income you will get on the back end by delaying, you would probably need a professional advisor for that though. Good luck!
Time heals all wounds and sometimes it helps salvage a 401(k) as well. You may be able to replenish your retirement funds given the time frame you noted. It really will depend on a number of factors: how much you set aside, the amount of any company match, the mix of investments, and the performance of those investments over time.
If you are not saving the maximum or you have no company match or you are socking away the money in only a "stable value" or money market type fund, then you may not be getting the maximum return on your savings. If you are selecting the "best performing" mutual funds, you may find that you are chasing past performance. Last year's winners may not be the same for this year.
You need to consider your appetite for risk (which generally tends to be less as you age and try to recover from the beatings received from the market over the past few years). You may want to try the risk tools available at www.RiskProfiling.com. For a nominal fee you'll have a good measure of your risk that you can use in conjunction with your advisor.
Armed with that information you can then be better prepared to select investments that may help you rebuild your nest egg. Asset allocation is still one of the best ways to reduce overall risk in a portfolio (but it never means that your account will never lose value at any given time). To find an asset allocation that is appropriate for you, speak with an advisor (consider one from BrightScope). Or use the tools available at Morningstar.com or www.myplaniq.com.
What matters more than the amount of cash you'll have when in retirement but how much you'll need. This will depend on your lifestyle, your debts and your health. If you have low debts and no mortgage, you'll have more cash flow for living expenses. If your company does not provide for retiree medical insurance, you'll need to budget for that as well.
The other issue in this equation will be Social Security. By delaying retirement, you'll build credit for a higher monthly benefit. There are even specific strategies for when to claim Social Security that may improve and maximize your total benefits. (Check out www.SocialSecurityTiming.com for more information).
If you're looking to put hard numbers to your question, you can try the tools at www.FreeRetirementReport.com. A link to this is available through my company website.
Hi, Nelly. The simple answer to your question in concept is yes. Two very important steps for you to take now include 1) planning; and 2) reducing your market risk. Your portfolio (that is, your 401k plus your other savings/retirement accounts) should be an optimal blend of growth (riskier stuff) and capital preservation (safer stuff, protecting the value against further downturns in the stock market).
Downturns are going to come again and again: It is the nature of the beast. If you are successful in getting yourself retired (and I hope you are!), then you will see many more market downturns during your retirement. Preparing for that now is going to be key to your success after retirement.
Building and maintaining the right portfolio for you is the practical work. Then, you also should do the conceptual work of trying to sketch out your road map between today and tomorrow. How much money will you need to live on? What other sources of income do you have besides your retirement savings (e.g., Social Security, pension, etc.)? How much will you be able to put aside between now and then? And what is a realistic, best guess (conservative) for how much your money can grow between now and then?
Having a plan is not about being accurate or right on about future events. But it is about helping you "see" your way from now until then. By seeing the road before you, you will have more clarity, excitement, energy and personal momentum for getting there. These ingredients are just as necessary for achieving your goal as time and money are. This is your self-motivation.