7 Tips to Achieve Retirement Success

by Jason on November 5, 2009

Success! Wikipedia defines it as:

The achievement of an objective or a goal.

When it comes to saving for retirement many of us naturally want to achieve our goals.  The fact is, for most of us retirement is a marathon race and not a sprint so it’s important to have some ideas in mind to keep you on the right track.   Here’s a look at seven tips to successfully achieve your retirement goal:

Start Now!

“But I didn’t get an early jump on retirement saving when I was younger, so what’s the point”.  It doesn’t matter.  If you haven’t saved anything yet – you need to start saving retirement ASAP!

If you have started saving already – reevaluate the amount you’re putting away and determine if you can begin putting an extra $50 or $100 (or whatever amount you can).

Define Your Goals

Of course you have to know what target you’re aiming for if you’re going to hit it.  If you don’t have some defined goals you’ll really have no idea how to evaluate your progress.

This is Planning 101.  What do you want to achieve?  When do you want to achieve it?  Maybe it’s a certain dollar figure in your 401k or a goal to retire at a certain age.  Or, maybe it’s to have enough money to do short-term missions trips or serve at homeless shelters.

Sit down and jot some ideas on a piece of paper with your loved one so you can get a taste of what you’d like to do.

Determine Your Time Frame

Now that you’ve got some idea of what you want to accomplish and perhaps the age at when you’d like to retire determine how many years you have to make that happen.

If you want to retire in five years, but you’re not really saving much right now and you’re strapped with debt – maybe you need to reconsider.

Realistically determine your time frame and keep this number in the back of your head as you make other decisions regarding retirement.  If you need to start putting more away, sit down and take a look at expenses you can cut out or cut down on and make a huge effort to save more.

Determine Your Risk Tolerance

Now that you have your time frame set and your goals in mind – you can determine how much risk you should be taking.

Generally speaking, the shorter your time frame – the less risk you should be taking.  If you’re in your 30’s and you’ve got 30 years til retirement you have some time to make up any losses.

However, if you’re in your mid 50’s and you’ve got less than 10 years you may want to pull the reigns in a little and shift to a less aggressive portfolio mix.

Comfort level with your risk plays a big role in determining your tolerance as well as knowing how much you need to retire. If you don’t need that much more to achieve your goal – you can scale back the risk.  If you need more – you may need to dial it up a bit to get some gains.

Diversify Yourself

Diversification comes in three areas:

  1. Investment – Diversify your portfolio and your asset classes.  You don’t want all your eggs in one basket as the old cliche goes. The reason is because you don’t know what’s going up or down from one year to the next.
  2. Time – Diversification from a time standpoint essentially means that you have some shorter term investments as well as longer term investments.  It also means you plan for the unexpected (think short life span) as well as longevity.
  3. Tax – This means you spread your savings among taxable; tax-deferred and tax-free accounts to take advantage of the unique tax benefits of each.

Become Debt Free

To me, this is huge.  If you can become debt free before you retire you free up opportunities to give more during retirement, you releive the stress of needing to have a bigger nest egg or larger monthly income stream.

Debt can be bondage.  Ideally, you’ll be in a much better position if you can pay off all your debts including your mortgage.

Now I know some will argue that there will be lost tax benefits.  Sure, that might be, but some of that can be made up from charitable deductions (goal: give away the amount you’d pay in mortgage interest!).

Freedom from debt is liberating – and you’ll be glad you wiped them out before you retired.

Review Your Goals Often

In order to save retirement and stay on track you need to have set reviews.  These can be done annually or semi-annually.  The point is to schedule time to sit down and revisit your goals, check your progress and determine if any changes need to be made.

You won’t know how far off course you are if you don’t review.

Hopefully these tips will give you a start in achieving your retirement success.

How about you?  What other tips would you add to the list?

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