Most would agree that it has become more challenging than ever for people to save for retirement, let alone grow funds and secure a decent-sized nest egg.
Because return assumptions have dropped and interest rates are so low, people often need to stretch their available funds in ways that they never imagined. However, here are a few ways to help to secure that nest egg for retirement.
3 Ways to Secure Your Nest Egg
Use sensible tools
A Retirement Income Calculator helps to calculate savings goals. That will also help to provide a sense of how to manage the funds that have been saved. They usually require the following info:
- Amount already saved
- Salary percentage to save annually
- How much income is needed for retirement
- How savings are being invested
The tool then estimates and provides an assessment of how possible it will be to reach retirement fund goals when the time comes.
Trying various asset mixes will allow investors to see how good the chances of arriving at the target amount goal can improve or decline.
Easy does it. Slow and steady is the best way to build and safeguard a nest egg. However, playing it too safe may allow for feeling less anxious now, but could increase the risk of falling under the amount of needed retirement money.
Being too aggressive to garner higher returns with a market downturn could severely affect your funds such that it will never fully recover.
If you are using an investment broker who insists on very aggressive tactics with your portfolio, you may need to speak with a securities fraud lawyer regarding the handling of your investments and the issue of potential fraud that could lead to a decrease in your retirement funds.
It is recommended that the portfolio mix gradually shifts more funds toward bonds. Once retired, more funds should shift toward cash. To cover for the possibility of higher inflation, the nest egg will need to incorporate a certain amount of capital growth from the investments.
Understand Danger Zones to Your Nest Egg
Know what the most common threats to lowered retirement funds are. For example, there should be an emergency savings account at the ready to handle emergencies like home and auto repairs.
Otherwise, you risk having to make an early withdrawal that will have unpleasant tax consequences that could actually cancel out your earnings.
Assemble a blend of stocks and bonds that prevent market sell-offs from dispensing with savings while providing a chance of having high enough returns to maintain retirement purchasing power.
Balance the mix according to your particular situation. This will depend upon factors like:
- How large is the nest egg? The more funding available, the more likely you can afford stock investments
- The appropriate risk will determine how much to put into savings. For example, less aggressive risk will mean less money in stocks
- Other resources to cover expenses, such as pensions or home equity. The higher these amounts are, the more that can be devoted to stocks
To avoid scams, always insist upon a third party custodian on all investment accounts. Do not allow money managers or affiliates to retain control of assets.
Rather, account funds should be deposited in unaffiliated financial institutions such as major banks or well known financial firms.
Checks written to transfer or invest funds into accounts should be made out to custodians instead of managers.
If a broker or financial representative has a tendency to take higher risks, it is best to find a different broker who has a more conservative approach. When it comes to the issue of money matters, one should be cautious and proactive.
The fact is, those who really lost their shirts in the last meltdown were often involved in very risky investment strategies, some of which included elaborate scams.