5 Must-Haves for Your Retirement Toolkit

Are you building a nice garden home, a castle, or heading for life in a cardboard box? Earlier this year, the Employer Benefit Research Institute issued its annual Retirement Confidence Survey. If the findings are any indication, we should all examine our retirement toolkit and get to building. Only 21% of those surveyed felt very confident in their ability to live comfortably throughout retirement.

As you review where you stand, here’s a checklist of handy tools you should consider adding, oiling or updating on a regular basis:

1) Eyeglasses or Crystal Ball. In my mind, retirement planning starts with a vision. If you’re in your 20’s, it may be no clearer than the idea that you need to take some steps to create options (no, not stock options) for your future. Obviously, the closer you are, the more concise your vision should be. And don’t forget the non-financial stuff; retirement is not just a stack of dough. What will you do? Where will you live? Sure, it could mean golf and travel, but it also might just mean working in a different type of environment or for fewer hours. Shine up your crystal ball.

2) Savings Discipline. I still remember a series of commercials from a few years back where the main characters secure their retirement by stumbling upon a miraculous find. In one version, it was a priceless original of the Declaration of Independence stuck behind a painting bought at a garage sale. Nice thought, but not likely in the real world. Instead, focus on building your own independence by saving and investing on a regular basis. If you’re just starting your career, setting aside 10% specifically for retirement is a nice goal. Late to the game and you’ll need to up your percentage.

3) Guaranteed Income. Create a situation which allows your recurring fixed expenses to be covered by guaranteed income. Guaranteed income could come in the form of military retirement, Social Security, pensions, or you could purchase your own guaranteed income in the form of an income annuity.

4) Retirement Portfolio. What’s yours look like after the turmoil we’ve seen over the past few years? Have you built and maintained a diversified mix of equities (U.S., small/medium/large, foreign developed and emerging market stocks) and fixed income (all types of bonds, fixed annuities, cash and cash equivalents). If not, add “evaluate my portfolio” to your to-do list and ensure what you’ve got matches up with your goals and targets.

5) Tax Strategy. The ever-changing tax landscape makes it difficult, but critically important, to keep this tool razor sharp. And for retirement, tax diversification should be top of mind. That means saving and investing in a manner that allows you to benefit today and tomorrow through building taxable, tax-free (Roth) and pre-tax investments.

Whether you’re eyeing a modest place or a mansion, you’ll need the right tools to get the work done. There’s no better time than right now to evaluate your array of retirement gear.

This content is provided courtesy of USAA.


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