Wednesday, 29 January 2014

Saving For Retirement Takes Careful Planning and Foresight

Planning and foresight are just two of the strategies used to guard against not having enough to live on when you retire. A sound retirement account also requires research and advice from qualified sources. Saving properly for retirement is no easy task, considering that the past decade has not been pleasant when it comes to cutbacks, layoffs, flat salaries, cuts in benefits and so forth and so on. While the stock market has been performing rather well these past 18 months or so, no one can predict when a "correction" will occur. Some people say that the events of late January 2014, are an indication that the bull may be tired of running.

There are income producing assets available that can boost not only your outlook and confidence in the future, but your retirement savings as well.  Investing in alternatives, the non-traditional investment opportunities that can produce above market returns, should be a small portion of your portfolio that just may generate whatever shortfall you may have experienced, as a result of withdrawing from your retirement savings, market corrections or who knows what.

Is there a safe way to withdraw to avoid risks inherent in investing in uncertain markets?

"Financial security in retirement is likely to be a shifting target that is influenced by largely unpredictable factors. Just as economic pressures continue to change, the thinking about retirement withdrawal rates continues to evolve. Rules of thumb may be useful and educational, but they are no substitute for a detailed, personalized retirement plan that is monitored frequently and adjusted as conditions demand."- Deena Katz, Wall Street Journal

Planning for retirement used to be easy, back when big corporations gave out gold watches and fat retirement pensions, along with free medical for life and other benefits; but not anymore.  Now the strategy and tactics of assuring a comfortable retirement must be hammered out early; as early as post-college graduation or sooner.  Young people today have little to no idea what it will cost to retire  in thirty years from now.  Heck, nobody has a firm grasp of the future, just best guessing. Regrettably thoroughly researching and learning as much as one can about common investment risks is an all-important education that most overlook/avoid. That’s why alternative investments should not be discounted; it should be embraced once an investor understands the markets, the associated risks, and has researched her/his choices from the vast array of income producing assets in the alternatives arena.

Traditional investment vehicles like stocks and bonds, mutual funds and others provide a pretty balanced risk level, and your retirement planning may not require much tweaking. However, the cost of retirement is more than most are aware of, so some elevated risk in small portions may just be the ticket to higher yields and better overall portfolio outcomes.  Mindful of risk, some investors look toward precious metals, shipping container investments, real estate and a myriad of other vehicles.  One reason is the possibility of greater returns, despite the risks involved.  The limits on liquidity is both a benefit and a risk, and should also be taken into account.  While some view liquidity as all important, the lack of it is also a way to handcuff one’s self, keeping from being affected by "shiny object syndrome."  Jumping at the next great thing is often where investors get into trouble.

In the end, the planning you do for retirement savings should start early, reviewed often, have frequent risk evaluation and experience an annual adjustment of the plan to better predict goal attainment or shortfall.  It takes foresight, planning, timing, research, as well as sound advice, to weather the retirement savings storm and be successful in choosing a good investment that both provides and protects.

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