Now let’s get in to some math. Let us assume you need an annual income of around $40,000 plus pension benefits of $20,000. Now you pull in around $6000 per year reward which you so rightly deserve after such a long eventful career.
When you add it all, you may need about $1.6 million. Before you start searching for some anti-anxiety tablets, just relax and take a deep breath.
This all leads us to three stage strategies for reaching finance independence. You will have to make investments quite differently. You’ll be tapping some other assets as well, including a superbly incredible one known as your brain! Plus you need to stay totally flexible, cutting expenditures when situations are hard, and indulging in more investment spending when markets are flush.
No unrealistic promises here: To manage a dream filled retirement, you will have to get real.
Use the power of stocks
In order to make your retirement a dream filled one, you need to make investments in a more aggressive way.
If the stock market gives you average results over a long period of time in your career, an aggressive investment approach would provide you with a large retirement stash by the time you are ready to retire. It may even allow you to squeeze few more years of income from the portfolio you made.
On the other hand if performance of market is poor, your aggressive investment strategy comes into play here too. Though it may have lagged behind to some extent during your work years, the good growth potential of stocks becomes a winner as a result of an aggressive portfolio.
Try to tap few other assets
There could be chances that smart investment alone may not be sufficient to cover the complete tab. You may have to pool in some more assets.
The greatest asset you have is your own earning capability. You can plan to work after retirement. The earnings from a new career after retirement, some part time job or some new venture could add up to sizeable assets. Colonel Sanders started Kentucky Fried Chicken in his later years in life.
Another good asset which you may want to tap is your house. With property prices up in some areas by about 40%, you could be sitting on a home-equity cushion larger than $125,000.
Try to adapt to a flexible spending plan
After you maximizing the assets which you own, you should move your consideration to another important tool at your command: Management of your spending. Once you start tapping your portfolio after you retire, develop a flexible attitude on the spending which will help you stay on the track.
Like your balance life, retirement never comes with any guarantees. But if you move forward with a sound plan, a firm determination to indulge in savings along with a discipline to adhere to a perfectly sound strategy for investment and a resolve to always remain flexible as per the circumstances, you’ll have succeeded in giving to yourself a great shot at enjoying your dream retirement.