IF you’re looking to retire, you’ve probably already gotten a solid grasp on your wealth management strategy. But only 18% of U.S. workers report that they feel “very” comfortable retiring when they’re able to. Retirement planning often starts in individuals in their late 30s and carries onwards from there. For example, many start looking at their personal savings account and start considering using a 401k management company to see how financially ready for the future they are.
But the truth is that not everyone has the same level of wealth management skills, and some might not have made the same choices as others when it is time for retirement. So to help those individuals with their retirement plans, here are three things you should keep in mind when it comes to retirement wealth management.
Have a Cushion
Going into retirement 100% invested in stocks and bonds is actually a bad idea, and there are several reasons for this. If you plan to retire on, say, Sept. 30, and the market crashes the day before, or any time after, you’re not in good shape. You should create a buffer against that by having at least two years worth of savings in cash.
This allows you to keep your investments and avoid having to sell them at the worst possible times and still meet your expenses.
Keep An Eye On Interest
The Federal Reserve has been raising interest rates slowly over the years, but this isn’t technically bad. This is because the interest can actually cause your savings account to grow. While it may be a slow process, as most companies will be rather conservative in passing along any rate increases to their consumers, it can happen and is something to look forward too.
Diversity Is Key
Those saying for retirement often don’t have much knowledge on if they should invest in 401k, or a Roth 401k, which is something that combines after-tax features of a Roth IRA and a traditional 401k. So instead of picking one over the other, you should place your bets on keeping some of the retirement in a Roth account, and some in a traditional tax-deferred account.
This gives you more flexibility when you pull money out and gives you more security over all.
Retirement planning and wealth management can be incredibly important to your future comfort once you reach an advanced age. To get the most out of your money, follow these tips.