Keeping your retirement goals top of mind is key to keeping your strategy on track, regardless of your age.
8 Steps Today to Help Plan for Your Retirement Tomorrow
Most Americans will need retirement savings that will last approximately 30 years. While those years may seem far off now, what you do this year can have a big impact on your retirement plans. With that in mind, here are a few financial steps to consider this year when assessing your retirement and investment goals.
- Do a Portfolio Review: Examine your portfolio and consider whether you should rebalance your investments. Over the course of a year, your portfolio can shift away from your desired allocation. If stocks have risen dramatically, you might be taking on more risk than you can handle. If fixed-income investments were strong, your preferred balance between stocks and bonds may need to be addressed. Scottrade clients have access to a Portfolio Review Tool that helps them determine whether their investments are properly allocated and are in line with their objectives.
- Evaluate Individual Investments: After you’ve evaluated your overall portfolio, review individual investments. Does each one fit with your investment goals and risk tolerance? Does an individual stock still meet your standards? Is a mutual fund still following its stated objective?
- Learn More About Investing: We can all become more educated when it comes to investing. Increasing your knowledge about the markets and investing could help you make better financial decisions.
- Prepare for Estate Planning: The inevitable truth is that no one lives forever. With that in mind – and if you haven’t done so – consider preparing a will or establishing a trust that will dictate which assets go where. This will likely increase your peace of mind now and may prevent family disputes later.
- Outline a Budget: While emergencies do happen, create a budget for known expenditures. One starting point would be reviewing expenses over the past six months to a year. Ideally, you and your spouse or partner would work together on a budget that works for both of you. Communicating thoughts about your budget is the first, and potentially the most important, step to take when discussing your expenses.
- Plan for Health Care Expenses: Many employers offer ways to help plan for and fund health care expenses, such as Flexible Spending Accounts, Health Savings Accounts or other savings options. In some cases, these plans offer certain tax advantages. Planning ahead for health care expenses can help prevent you from dipping into retirement accounts to pay for unexpected bills.
- Check Retirement Goals and Investments: As a starting point, review your retirement goals. Have they changed recently? Are you saving enough for retirement in your 401(k), IRA or other retirement accounts? Over time, even a 1 percent increase in contributions each year can substantially increase your nest egg. Scottrade’s Retirement Savings Calculator can help you figure out whether you are saving enough to retire on your own terms. If you’re not making contributions to retirement accounts, this may be a good time to consider determining what type works best for you. Consider your options, and which retirement account may work best; and inquire whether your contribution may be tax deductible. You have until April 15, 2015 to make IRA contributions for 2014.
- Check Your Emergency Fund: Ideally, you should try to keep three to six months of living expenses in an emergency fund. By doing so, you can keep your long-term investments for long-term goals instead of being forced to use them in the event of a job loss or other life changing event.
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