What are you thankful for this holiday season? Time spent with family and friends? A few days off work? Perhaps your health? If you’re like many people approaching retirement, you have a number of blessings for which to be thankful.
Many of our blessings and fortunate circumstances are determined by choices we made earlier in life. Your good health may be a result of your healthy lifestyle. Your financial stability is likely a result of your career choices and your savings habits.
What decisions can you make today that you will be thankful for in the future? Below are three actions your retired self may appreciate. If you’re approaching retirement and haven’t taken these steps, now may be the time to do so.
Reduce your risk exposure.
As you get closer to retirement, you may feel less comfortable with market risk. That’s natural. Many people take an aggressive approach when they are younger because they have more time to recover from losses. After all, a slight downturn in the market may feel insignificant when you have 20 years until retirement.
However, as you get closer to retirement, you may not have as much time to recover from a potential loss. If you haven’t already done so, now may be the time to review your strategy and make sure your risk exposure is appropriate for your tolerance. You may want to adjust your allocation or consider tools that limit downside potential.
By making adjustments today, you could potentially reduce losses if the market turns before you retire. Your future retired self will likely be thankful that you were proactive about limiting your exposure to market risk.
Increasing your savings.
Your last few years before retirement could be your best opportunity to make one final savings push. Now could be the time to trim your budget and find ways to increase your savings.
Fortunately, if you’re age 50 or older, you can contribute more money to your qualified retirement accounts. The IRS allows you to make “catch-up contributions” in excess of the normal limits.
In 2019, you can contribute up to $19,000 into a 401(k), plus an additional $6,000 as a catch-up contribution if you are age 50 or older. You can contribute up to $6,000 in an IRA, plus $1,000 as a catch-up contribution.1 Look for ways to increase your savings. Even if you can’t hit the maximum limit, any increase will help you accumulate more assets for retirement.
Planning and protecting your income.
Saving is a big part of the retirement planning puzzle, but it’s not the only piece. Once you retire, you have to generate income from your assets. It can be more tricky than it sounds. If you distribute too much income in the early years, you may not have enough assets left in the later years of retirement.
Now could be the right time to develop your income strategy. What’s the right amount of income to support your lifestyle and still protect your assets? What tools and strategies can you use to make sure your income lasts for life, no matter how long you live? Your retired self will be thankful if you address these questions today rather than after it’s too late.
Ready to put the finishing touches on your retirement strategy? Let’s talk about it. Contact us today at Boston Independence Group.. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
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Dispatches from basecamp.
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