For those who have ignored the fact that at some point of time they will no longer draw a monthly paycheck, a looming retirement date can give nightmares. While it is certainly not advisable to leave retirement planning until the last, it is also true that it is never ‘too late’ to start doing something about it. After all, some retirement fund is better than none at all.
It is a fact that a significant number of people depend solely on social security payments to manage their post retirement expenses. While social security is a good safety net, complete dependence can impose great limitations on the retiree’s lifestyle. After all, it is only after retirement that you can really do the things that you have always wanted to, but did not have time for. This is where retirement planning can make a huge difference, even if has been started late.
For late starters, the most important thing is to stop wasting more time bemoaning the years lost, and start immediately. Every day of delay is a day’s worth of interest lost on your investment.
Beginning your retirement planning with changing over to a more conservative spending pattern can help you in two ways. First, cutting down on extravagant expenses will accumulate more savings that can go into your retirement nest egg. Second, getting accustomed to a less expensive lifestyle can help you ease into the post retirement phase when the costs will have to be controlled anyway. Typically, retirees spend up to 85% of what they used to when employed.
It is important to remember that the nearer to retirement the investor is, the less risks he or she must shoulder. Younger people can afford to take higher risks and opt for high yield investment instruments because even in case of any losses, they will have several earning years left to recoup. For older people who want high yield along with lesser risk, mutual funds are a good option.
Remember that the best yields come from long term investments. But it also makes sense to avoid locking up funds that will be required for use over the next 5 years.
Planning priorities and working towards them will also help in following a focused investment strategy. Many senior citizens opt for part time work which brings in steady income albeit lower than before. An arrangement like this can boost confidence levels as well as provide valuable financial support.