In recent years the United States economy has seen some radical fluctuations, from the downfall of major financial institutions to the more recent news of increasing our nation’s debt ceiling. To put it gently, times have been relatively tough for the average American, especially those looking to retire in the near future.
Many individuals are looking to financial advisors for help, hoping to find sound advice which will grant them success on their road to retirement. But still, even with professional advice decisions can be tough to make and the fear of the unknown can bring about a sense of panic. Whether you’re forced into early retirement due to a job loss or you’re still in the pre-retirement stage of your life, planning for retirement in today’s economy is going to require an array of hard decisions.
Here are just a few key decisions every individual planning for retirement will at some point have to make.
· You’re going to have to decide if you want to keep your current 401(k) where it is, or roll it over to an IRA. If you do decide to rollover to an IRA, you will also be faced with the decision as to how much to invest.
· When determining your investment options you will have to decide whether you want to take an aggressive or relatively passive position. Remember, which ever route you do choose to take, the returns must be large to stay ahead of inflation in order to cover the increase in cost of living expenses.
· Another major decision to be made has to do with your Social Security. Do you take Social Security payments now or wait until you reach your full retirement age? If you can afford to wait until you turn 70, or reach the break-even point, your benefits will be larger, but many people feel they simply can’t wait.
· Determining what to do with your mortgage payment also plays a major role in preparing for retirement. Do you sacrifice some of your retirement money and pay off your mortgage or continue with a large monthly expense? This option generally requires a fair amount of capital, which would reduce the amount of available funds for an individual, but would also get rid of one of your largest monthly expenses.
These are just a few of the decisions each individual planning for retirement will have to evaluate at some point in time, but regardless of how difficult they may be, preparation is the key to a smooth retirement. Retiring in today’s economy has become pretty complicated, with many rigorous calculations needed to achieve success, but don’t let that discourage you. There are plenty of tools and credible financial professionals out there to help you make these decisions, just take your time, do plenty of research and make sure you find the best options available.