We all worry about how we can afford to retire; the market crashes of the past few years have made this a particularly pertinent issue, demonstrating how a nest egg that took a lifetime to grow can be decimated in just a few short months. Retirement expenses are often as high as expenses we faced during our working years; in fact, our expenses often go up in the early years of retirement, as we have more leisure time to spend money traveling, eating out, or indulging in expensive hobbies.
New Income Sources
The first issue is adjusting to new ways of deriving monthly income. During our working years, we drew a steady paycheck; most went to paying monthly expenses, and some was banked. In retirement, we need to formulate strategies for income replacement. Most government employees will draw pension incomes that can be 80 percent of preretirement income; some large companies also continue to offer traditional defined-benefit retirement plans, which promise steady payments throughout retirement, with a survivor benefit for one’s spouse.
More and more, however, employers are leaving it up to employees to manage their own retirement income, offering 401(k)s and other defined-contribution retirement plans. Here, you will manage your own retirement account throughout your working years, investing your 401(k) contributions however you wish, among the options offered by your company. Your account will fluctuate with the markets, depending on how you choose to invest the funds. And on retirement, you will have further options, whether to roll your 401(k) into an Individual Retirement Account (IRA), cash it out and reinvest it in bonds or securities, purchase an immediate annuity that provides a steady income stream, and so on. The choices are nearly endless.
Get Help By Consulting With a Financial Planner
If you have little heart for thoroughly researching your options and need help, think about consulting with a retirement specialist. Certified financial planners with particular experience in retirement planning are more and more common, as retirees face an ever-expanding array of options. You can hire a financial planner for a single session, for a series of meetings, or to manage your nest egg on your behalf; your planner may bill you by the hour or by a percentage of money you have to invest. If your planner sells financial products as well as advice, ensure that he or she makes suggestions that are suitable; if your planner earns commissions on sales of annuities or similar complex products, be careful. Your planner should be properly licensed, and should have your best interests at heart.
Other Income Options
If you come up short, you may need to consider retirement employment options. This can range from part-time work for extra cash to consulting or other high-paying work to opening your own business. For many people, retirement doesn’t mean not working — and many retirees who are already well off are choosing to continue working, out of interest in their business or occupation.
Just because we’re retired doesn’t mean that the bills stop coming in. If you’ve planned well and invested wisely, you may be in good shape as far as retirement income is concerned, but if you’re short, you may need to explore other options.
An investment calculator can be a wonderful tool if you are contemplating investing but are not sure which scheme will give you the best financial rewards. With so many companies now advertising on the internet, it is easy to gain access to a great many investment opportunities.
Many companies who are available to handle your investments will feature an investment calculator on their website. These are usually easy to use and will give you an idea of what return you can expect if you put your money with them. The calculator is there to help you get a clear picture of what you can expect back after a certain length of time. There are many variables which you can enter into the equation and all of these can be taken into account when calculating the results.