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Financial Planning for Retirement

Financial Planning for Retirement: The Basics

  1. Invest in the Stock Market. As you get pension, retirement income, or Social Security benefits after retirement without any other steady source of income apart from it, you need to be financial wise. Investing in the stock market may go up and down, but over time it grows at a definitely higher rate than inflation. You need not be stock market savvy to benefit from this, as there are a lot of investment companies that are willing to put in the work for you and all you have to do is to invest.
  1. Own Bonds. While interest rates may always be minimal, the price of bonds—including Treasury bonds, corporate bonds, and municipal bonds are always historically expensive. In general, bonds offer for a safer investment scheme. It will be a prudent move for you to set apart some of your retirement funds for bonds, more specifically through low-cost mutual funds or ETF’s sponsored by major financial institutions.
  1. Have a Lump Sum in Cash. You never know when you’ll need a bundle, so it’s imperative that you keep a stash at home. Could be under your mattress, in a safe, or anywhere else you deem it safe.
  1. While incurring debt during your retirement is an option, thinking about the retirement money you get periodically, this should be the last option. Think long and hard before taking a debt, and if you have already, make sure you plan ahead to live within your current means. Note that retirement means having no job, and no raise, and the 1.5% increase in Social Security is really not something that matters enough.
  1. Do Not Gamble. On your retirement, you will most likely be lured or tempted into engaging in various investment schemes that will look like sugar-coated financial packages that, sadly, may not be as sweet as it seems. For instance, Internet Stocks always looks as inviting, when in reality, they may even be more risky than established companies offering stocks in the market. Note that your retirement is not the best time to take risk at all.



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