In the current economy, preemptive planning is necessary if you would like maintain your standard of living through retirement. There are a number of ways to manage your wealth for use in retirement, both conservative and liberal. The methods that you choose for managing your money and saving for retirement all depend on the amount of risk you are willing to take.
Many of the tips online focus on common-sense ideas that will help to develop your portfolio while also creating and continuing your financial stability. These include ideas such as “reduce and limit your debt”, “avoid “get-rich-quick schemes”, and “have realistic and concrete goals.” The following bullets will succinctly explain these and a couple other guidelines for helping to manage your wealth for retirement.
- If you live with continuous debt (credit card or otherwise) throughout adulthood, you will not be able to put away money for retirement purposes. It would behoove you to limit any and all credit card debt unless you are able to pay it of almost immediately and to pay off as soon as possible any student, home, or car loans that you cannot escape or have already accrued.
- One rule of thumb that some people use for developing their portfolio is: “If it sounds too good to be true, it probably is.” Don’t be duped by a dubious scammer who will harm your financial standing.
- Be sure to ascertain exactly the expectations of an investment, the amount of work that must be put in, the return on investment you will receive, and the methods that will accomplish each.
- Take the time to find resources, online or in print, that will give you an idea as to what you should expect as “realistic and concrete goals”. For some people, this process will include a financial advisor who can help guide you at the beginning of your wealth management path.
- Look at the big picture when planning for retirement, creating a wealth management plan, and/or initiating your wealth management for retirement plan. This includes making considerations for one’s beneficiaries, the standard of living one would like to continue, and the significant changes in the economy, as well as other factors.
There are a number of what can be called “traditional” methods of creating and using retirement funds, which include 401(k) accounts, mutual funds, and lifetime annuity plans. Financiers, economists, and financial planners often debate the respective merits and disadvantages to each plan, and the individual’s priorities and preferences are often the deciding factor in selecting one or more of these options. For example, life annuities allow for the highest monthly distribution, but they often neglect bequest considerations; life annuities are also available as fixed or variable plans, which play into the choices an individual may make regarding these plans. Continuous contribution and/or employer matching to 401(k) plans will practically guarantee your financial security and a certain standard of living, but your wealth will not increase by a substantial amount by just using this method.
While the variety of accounts and investment options may make you want to run away screaming, there is even a simpler tip to managing your wealth. Most sources advocate maintaining liquid investments. This means saving money from every paycheck to be used for emergencies instead of frittering away your potential wealth on illiquid investments, such as jewelry. That is not to say that you can’t or shouldn’t invest in things like houses or cars, but that having a fund that can be accessed if needed is definitely a good idea.
To recap, managing your wealth can begin with simple steps—limiting your debt, thoroughly researching your investment and account opportunities, having some liquid investments in case of emergency, and making a coherent plan for your retirement—, and these steps can do nothing but improve your financial standing and ability to invest further.
Nelson Hamwey is a blogger and entrepreneur that manages a variety of websites across multiple industries.