“What do I do now?” This is the question that is being asked by everyone from baby boomers on the cusp of retirement to 20-somethings who have just started their retirement savings. Today’s volatile market has left many people uncertain of how to proceed.
Challenging economic times call for a return to basic principles, like a commitment to personal savings, seeking professional advice to help investors assess their personal situations, and employing a holistic approach to retirement planning.
A thoughtful approach to preparing for retirement is important for all individuals, no matter how far off retirement might be. The Four Pillars of U.S. Retirement, a report issued by The Prudential Insurance Company of America in 2008, provides a framework to discuss how Americans can help prepare for and live in retirement.
For most Americans, no single pillar will be sufficient to meet retirement income needs. Now more than ever, to save and plan effectively for a secure retirement, individuals should consider how Social Security, workplace-provided programs, personal savings, and retirement choices will affect their ability to live comfortably in the future.
Here are five back-to-basics tips to help get your retirement plans back on track in this challenging market:
1. Know the options and outcomes for drawing your Social Security benefits. If you are nearing retirement, be sure to understand your options and how you can maximize your Social Security benefits. Be clear about the tax implications of early or delayed benefits.
2. Continue to leverage and maximize your workplace-provided programs. If you aren’t already, enroll in your workplace-sponsored defined contribution plan –401(k), 403(b), etc. — if one is available. You should contribute at least enough to get the full benefit of a sponsor match. This is not the time to “leave money on the table.”
3. Make the most of your personal assets. Despite the uncertain economy, remain level-headed. Follow the basic principle of investment diversification, which continues to be an important element of any financial plan. Work with a financial professional to appropriately allocate assets based on age, investment objectives, risk tolerance and years to retirement.
4. Assess — and maybe reassess — your retirement choices. The current downturn may require you to re-examine key retirement choices, such as when to retire or where to live. A tax-efficient approach to taking retirement income can play a big part in how long your retirement assets will last. Understand the financial implications of your desired lifestyle and consider which choices make sense for your personal situation.
5. Seek assistance from a financial professional. If you don’t already work with a licensed financial professional, a trusted friend or peer can be a good source for referrals. Schedule a time to have a conversation with a professional who can assist you with your planning needs for your future retirement.
Planning for retirement now by taking the back-to-basics approach is very important. In a down economy we must all take a realistic position on how different areas of our retirement are affected in order to help have a bright financial future.
This article is not intended to provide tax or legal advice. You should seek such advice about your particular retirement goals and objectives from your legal and tax advisors.
0192033-00001-00, Ed 12/28/2010, Exp 6/3/2012
Provided courtesy of Prudential Financial Planning Services. For more information, contact Jeffery Palmer, Financial Planner, ChFC who offers investment advisory services through Prudential Financial Planning Services, a division of Pruco Securities, LLC. Jeffery Palmer’s private office is located in Asheville, NC. He can be reached at firstname.lastname@example.org and (828)687-8818.
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