Retirement once meant a gold watch, time with grandchildren and income from the company pension and Social Security. However, few people today work for a company long enough to be guaranteed a pension. Social Security's future is anyone's guess.
Clearly, delveloping an investment strategy for retirement is a necessity.
Although planning for retirement may seem daunting, it's easy if you follow some simple rules:
 Start now. Determine the income you'll need to retire. Develop an investment plan. Maximize your options. Don't borrow from your retirement funds. Seek the help of a financial professional. |
Start Saving Now
Time and earned interest are one your side. No matter what your retirement goal, the sooner you begin saving, the less money you'll need to contribute regularly. Longer time horizons also can boost the power of compounding for you.
Determine Your Retirement Needs
As a rule of thumb, you'll need about 70 percent of pre-retirement income to maintain your standard of living during retirement.
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Consider these easy steps.
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| 1. | Calculate what 70 percent of your current income will be when you plan to retire by factoring in an assumed inflation rate. |
| 2. | Estimate any income from other sources, such as Social Security and your pensions that will be available to you. |
| 3. | Subtract #2 from #1. This is the additional amount needed when you retire. |
| 4. | Estimate the lump sum necessary to generate the additional dollars during retirement. |
| 5. | Calculate the annual savings required, which, when invested at an assumed rate of return, may produce this lump sum between now and retirement. |
Develop An Investment Plan
Once the required annual savings amount has been determined, a game plan needs to be developed. A simple approach is to consistently "pay yourself first." Investing on a regular basis is convenient and fosters discipline. Contributing regularly (i.e., monthly, quarterly) helps take the guesswork out of when to invest and helps avoid "timing the market."
Regular investing, however, does not assure a profit nor does it protect against loss in declining markets. You should, with your financial professional, carefully consider your ability to invest through periods of low price levels.
Choosing the investments suitable for you is also important. Most experts recommend diversifying assets based on the level of risk and return potential one is comfortable with as well as the investment period. Tax-deferred investments, such as annuities and certain types of life insurance, are popular vehicles for accumulating retirement income. The insurance and investment features offered by these products can boost the potential for growth and asset diversification.
Maximize Your Options
Taking full advantage of qualified retirement programs such as IRAs and employer-sponsored 401(k) plans should be considered first before implementing other strategies. Not only is growth in invested dollars tax-deferred in these programs, but in most cases, contributions are on a pre-tax basis, helping to reduce your current taxable income.
Don't Borrow From Your Retirement Funds
Emergencies happen, but money invested for retirement should only be accessed as a last resort. Withdrawals reduce your assets' growth potential and in some cases, may have adverse tax consequences. To cover emergencies, you should establish a fund with three to four months' living expenses placed in short-term, liquid investments and readily accessible to avoid tapping into other assets.
Seek The Help of A Financial Professional
With so many retirement options available, it's important to have a trained financial professional on your side to help you develop a personalized investment portfolio. Each investor's goals, investment horizon and comfort level are different and no single investment is likely to be the right match for everyone's needs. In planning for your retirement, your financial professional can help you determine your income needs and develop a year-by-year investment strategy to help meet those needs.
Why Jefferson Pilot Securities?
For over three decades, Jefferson Pilot Securities Corporation has offered investors a wide array of securities and insurance-related programs through a nationwide network of independent financial professionals.
Jefferson Pilot Securities Corporation provides their representatives with the specialized support they require to help meet their clients' individual needs. This includes access to more than 3,000 mutual funds, as well as a broad spectrum of other products, each of which has been reviewed for both quality and financial stability. In addition, Jefferson Pilot Securities offers it representatives access to the stock and bond markets.
By combining its tradition of quality, service and stregth with the experience and expertise of independent financial professionals nationwide, Jefferson Pilot Securties can offer solutions to your financial needs.
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