Thursday, May 23, 2013

Retirement Advice from Real People

Practice Retiring

How do you really know how much you’ll need to save for retirement? The answer is that you do not but there’s a way to put some data behind your projections. Sydney Lagier, retired owner of the blog, Retirement a Full-Time Job, says that she and her husband tested their retirement budget the best way they knew how: They lived it before actually retiring.

“My husband and I agreed to practice living on our planned budget before I retired. Of course, we could not. That practice run was a reality check that I'm glad I sorted out before I actually pulled the trigger on retirement.”

If it doesn’t work, make changes. Those changes will give you an idea of your retirement lifestyle. Will one or both of you have to continue working part time? Can you cut expenses enough to be able to travel or lavish the grandchildren with gifts? Everything costs more than you think.

Don’t Fall for the Sales Pitch

Every investment advisor has the magic fund that will set you up for the retirement of your dreams but as so many learned in 2008, those dreams can become a nightmare almost overnight. Boyd Lemon, author of Retirement: A Memoir and Guide, advises retirees to be wary of the products financial advisors try to sell to them.

Do not expect a higher return with low risk no matter what the investment adviser says. If the return is high relative to government bonds, it means that the risk of loss is correspondingly greater. You can count on that.”

If you’re behind on your retirement savings, ratcheting up the risk in your portfolio isn’t likely to make a large-scale difference especially if you’re nearing retirement. Instead, contribute more.