My Retirement Plan Ends … Someday
Tame Market Jitters: How many times have you heard people utilize the “one more year” syndrome where they delay retirement for fear of a market crash? Right now we have one of the highest stock market levels in history. Thus, this fear is probably warranted. However, here is a secret: you can retire at any time, even with a depression, if you plan your retirement correctly.
The key in retirement is to tame market jitters. By utilizing the strategies that I mentioned in Part IV, below; that is, by taking a conservative, annual 3% of your portfolio to live on, by getting an annuity and/or by purchasing bond ladders and reducing your assets held in the stock market, and finally having at least three to five years of cash or cash equivalent in case of any market crash, you won’t have to worry about any stock market fluctuation.
As we get older, we should seriously consider moving at least 50% of our assets into a “bond tent” that has a series of bonds that mature in various years. Your goal is NOT to get the highest return on your assets. Your new goal should be to lose as little money as possible in a bear market!! This is why bonds and annuities really shine.
Plug your financial leaks: Even if you follow my advice and think that your portfolio should last thirty years or more, insidious leaks can sink your retirement. To ensure that your retirement plan is solid, pay off any high interest debt. Avoid taking on new debt in your 50’s or 60’s and DON’T cosign on any loans. If you are going to support kids or grand kids, let them know that this is going to stop.
Finally, make sure that you have good insurance that would cover you for almost any emergency. Thus, make sure you have good health insurance with a supplement such as a Medicare supplement. You want good liability insurance with a good umbrella policy in case you have an accident or get sued. You want a plan for long term care insurance. If it is at all possible to get flooded, get flood insurance. You want to update your home owner’s insurance to make sure it covers the latest full market value. The key is that you want to eliminate risk and possible financial disasters that could sink your retirement plan.
Part VI will be presented on Monday. So stay tuned.
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