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Retirement

9 Tips for a Financially Successful Retirement

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With the right savings and investing strategy, a successful retirement is within reach. Here are some ideas to discuss with a financial advisor to help you stay on track in achieving the retirement lifestyle you want:

1. SAVE EARLY AND EARNESTLY

The single most important thing you can do is save at least 15% of your annual income every year:

  • Contribute what you can to your employer’s 401(k), 403(b) or 457 retirement plan. This is the best way to save the most. And if your employer matches  contributions, growth is even faster.
  • Establish an Individual Retirement Account (IRA). This enables you to save on a tax-deferred basis — which is important, even if you aren’t eligible to deduct your contributions. If you qualify for a Roth IRA, taxes are not deferred, but the distributions are tax-free when you retire.
  • A SEP, SIMPLE or Individual 401(k) plan is a way for small business owners to save.
  • Don’t forget about taxable investment accounts to round out your savings.
  • Do the math to see whether your contributions add up to 15% of your gross annual income before taxes.
Infographic: 9 Tips for a financially sucessful retirement

2. DON’T OVERSPEND

The less you spend, the more you can save and invest for growth. Know how you are spending your income and periodically review that spending to make sure you know where you stand.

3. BUILD AN EMERGENCY FUND

Having a cash reserve reduces the chance that you’ll have to tap retirement savings and disrupt long-term goals if something unexpected happens. Some experts recommend having enough cash saved to cover at least six months of your total expenses.

4. CATCH UP

Being 50 or older allows you to contribute extra money to your IRA, 401(k), 403(b) and most 457 plans to boost savings.

5. UNDERSTAND SOCIAL SECURITY AND PENSION BENEFITS

Knowing your expected Social Security and pension payouts will clarify how much retirement income you may need from your investments. Review your options, because the age at which you start taking benefits can make a big difference.

6. INVEST MORE OF WHAT YOU SAVE

It may feel “safe” to keep your money in cash or CDs. However, in today’s low interest rate environment, a well-diversified portfolio may provide higher returns over the long term that can help you keep up with inflation.

7. MAKE SAVING AUTOMATIC

One way to do this is by “paying yourself first” — have a certain dollar amount taken out automatically from each paycheck and deposited into your retirement plan.

8. PLAN FOR RETIREMENT HEALTHCARE COSTS

Better lifestyles and healthcare mean most of us will live into our 80s, 90s and possibly beyond. But healthcare inflation and those extra years likely will add up to higher medical costs later in life.

9. MEET WITH YOUR ADVISOR ANNUALLY

Smart investing for the long term takes time, thought and patience. Meet with a  financial advisor at least annually to discuss your changing needs and goals and refine your portfolio, as needed, in order to stay on the path to the retirement you want.

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