If you’re in your mid-20s or 30s it’s probably hard for you to think of your life after retirement. Maybe you think that you can probably skip this type of article and get back to it in a couple of years. However, as a forward-looking person, you should realise that it’s never too early to think about your future happiness and well-being.
It’s up to you to decide, but for now, we’ll address those readers, who are actively preparing to start their after the hard-work life and, for those who already enjoy the benefits of permanent vacation.
Generating income for retirement, an easy task or a real problem? Let’s say, it’s pretty complicated, but manageable, especially if you’re ready to delve into the world of investments.
There are several approaches at your disposal that you may choose for your savings: risky and conservative. It’s a common believe that someone who has a substantial nest egg can relax and simply live on the interest and dividends. But, what is a substantial nest egg? One million dollars, two? Besides, over the course of time, the interest rate is usually getting smaller and smaller, that’s why it’s vitally important to re-evaluate your investment portfolio and retirement plans every year.
No guts, no glory: is it true?
The thing is, you need to find a perfect balance according to the budget you have and the retirement plans you hope to build.
Even if it sounds tempting during bull runs, a sudden market crash can spoil your plans. Depending on your nest egg, you can consider investing in any of the following: global and corporate bonds, US and emerging market equities, high-yield and short-term bonds, large-cap dividend paying stocks, etc.
The pool of available options is rather large and makes retirement planning a bit confusing. That’s why hiring a good and reliable financial advisor is always a brilliant idea. Please make sure you can trust this person, otherwise, don’t hesitate to address another consultant.
To work or not to work? That is the question
While you’re thinking about where to find a perfect financial consultant, we’d like to offer another very effective way to improve your retirement financial position – work a little bit more, if you can.
If you feel like working for a couple of years longer, that will guarantee a substantial bonus when you finally decide to take a long rest. Another option is to combine a part-time job with the retirement.
Mind your lifestyle
Planning your after-retirement life, you can think about downsizing your lifestyle; that will help to increase your savings. Let’s say, you have a big family with three children and are used to living in a big house that costs you a lot. Years later your children are grown-ups and have their own homes. If you can put away all the nostalgic memories, it would be more profitable for you to move into a smaller place, adding some additional capital to your nest egg.
Choose the investment strategy
If you’re going to invest in bonds and don’t feel like a risky person, you should probably take a look at a short-term bond fund that provides diversification and mitigates the risk of the interest rate change.
By the way, don’t fall into the trap of chasing an enormous income. It can easily lead to extremely risky investments in stocks. Though of course, you need some profit, but the last thing you want to get is huge money loss due to improper decisions. Instead of trying to maximise your income and performance, focus mainly on the exact amount you need to maintain your level of life. The best approach is to carefully consider every step of your investment journey together with a professional financial expert and re-evaluate the chosen approach regularly.