The total amount you’ll have in your retirement account by the time you retire will depend on the choices you make and the future of the investment markets. While you can’t control what the markets will do, you can help to build your retirement account. To improve your retirement account’s long-term results, consider the strategies described below.
SAVE AS MUCH AS POSSIBLE
The more you contribute and the earlier you start, the more you’ll have in your account at retirement time, all else being equal. Years of compounded growth can result in a lot more money in your account than you actually put in. Also, you won’t be paying taxes on your contributions or on account earnings until you withdraw money from your account.
TAKE SOME RISK
Invest a significant portion of your retirement money in higher risk investments, such as stocks. You will need to stay ahead of inflation to have real growth in your retirement account. The price you will pay for the “safety” of low-risk investments, such as money market portfolios, will be potentially lower returns that may not keep up with inflation.
KEEP TRACK OF YOUR INVESTMENT
It’s important to track your investment results periodically. You need to find out how well your account is doing and whether your returns are high enough to meet your retirement goals. Also, if you experience any major life changes, you may want to reassess your investment strategy. You may need to make changes in your portfolio mix at some point; however, don’t react to every short-term swing of the investment markets. If you have several years before retirement, you probably will be better off waiting out temporary periods of declining prices.
DON’T GIVE IN TO TEMPTATION
It may be very tempting to spend some of your retirement plan money before retirement if your plan permits, especially if you experience a hardship. If at all possible, leave the money in your account and don’t give in to temptation. You usually will have to pay a 10% tax penalty plus regular income tax on the withdrawal. But more importantly, you can’t retire on money that you have already spent. If you change jobs, make sure you roll the money over into an individual retirement account or your new employer’s plan.
KEEP THE FAITH
If you contribute as much as possible, invest in higher risk investments, make changes only when necessary, and leave the money in your account until retirement, you will be on track toward a more secure retirement. And, any sacrifices that you have to make now will be worth it when you are enjoying your well-deserved retirement.
Article provided courtesy of: Brailsford Wealth Management of Davenport & Company LLC
The material contained herein is for informational purposes only and is not intended to be specific to any particular personal situation. This material has been compiled from sources believed to be reliable at the time prepared; however, Davenport does not guarantee or warrant its accuracy or completeness. Changes may take place in the future that are not reflected in this material. Any opinions expressed here are statements of judgment on this date and are subject to future change without notice. Please consult your professional accounting or legal advisor prior to acting on any information provided by us that may have an effect in these areas.