Catch up on Retirement in 9 Kinda Easy Steps

By: Steve Dahl

Bank CDs or cash under the mattress are not retirement strategies you can count on. Learn retirement strategies that work in this condensed list of Nine Ways to Catch up on Retirement Funding. No one is going to hand you a more secure and enjoyable retirement, you're going to have to plan for it! The clock is ticking and every year means a big chunk of your earning power has passed you by. If you don't change how you manage your money today, you will simply have less of it later! This is no time to feel guilty or stupid for where ever you might be in your retirement planning, it's just time to start.

1. GET A PLAN, STAN! - An estate plan. A financial plan. Yup, it's a cold fact. Any plan is better than no plan. A high paying bank CD might be a reasonable part of your retirement plan, if in fact, you have a plan. Face it, no plan and you're giving too much to the man... Uncle Sam. Take action this week. Read a good financial book to establish a basic retirement plan on your own or hire a financial planner or retirement specialist to get you on track. When you put together your own financial plan and/or estate you control what happens to your assets and your loved ones. One way to start right now is to call a retirement specialist or a referred financial planner. You should probably start with the basics like setting up your will, living trust, and depending on how many assets you have, a trust. The key word here is START!

2. KICK SOME ASSETS - If you had employees that just sat around all day you would kick some butt and put them back to work, right? Same reasoning here. Don't call your bank CD your retirement plan. Bank CDs may be a fairly safe place for money in the short run but it is normally taxed every year as ordinary income and you don't earn much. Take a close look at all of your assets and consider how they can be leveraged and protected for your long-term financial well being. Your home, your mutual funds, your bank CDs are all assets that you can help make retirement more enjoyable but by themselves, unattached to a solid plan, are not going to give you the peace of mind you hope comes with retirement.

Do not ignore the assets in your employer's 401 (k) or similar investment/retirement program. Employers might be doing a great job of managing your retirement account or they might be blowing it big time. Ask tons of questions, get a professional assessment of the investments but don't just check the box that the guy in the next cubicle did.

Most employers are happy to explain their plans in detail or they sometimes provide you with other resources to clearly explain the types of investments they offer.

Maximize any matching opportunity they offer. Never, ever, ever, forget who owns the money in that account.

3. GET THE FACTS ON THE TAX - Use tax-efficient instruments! Hold onto your money as long as you can and reduce your tax liability every chance you can. Your friendly neighborhood federal government gives you ample options to lower your taxes so take advantage of every one you can. It's quite simple. Reduce your taxes and you increase your income! Although it may seem overwhelming finding tax deferred or tax-free investment opportunities, financial products with tax benefits make a huge difference in the long-term viability of your retirement portfolio. Being a great saver doesn't cut it. Your basic savings account is going backwards compared to what you need for your retirement years. Would you rather take home 76 cents of every buck you sweat and toil to earn or would you rather take home 90 cents of every buck? Taking a second job is likely not as good of an idea as just reducing your taxes. Bank CDs are good examples of how Americans take the easy way out. There is nothing wrong with a bank CD but in most cases, they just don't give you many tax benefits.

4. DON'T LET LONG-TERM CARE BE A SCARE - Protecting your assets so they can keep working long-after you are not is the whole idea behind long-term care insurance policies. Don't let the hight costs scare you. What's scary is letting long-term care eat up your investments. There are two primary benefits to most long-term care policies. First, the care itself and, equally important is the fact that long-term care insurance may allow you to leave your investments alone so that they can keep working for you.

5. BECOME A DAY TRADER - NOT! - Late-night infomercials on television are pushing weekend seminars, books, and CDs that brag up how easy it is to make money by learning to be day traders, playing with futures, or gambling in currency markets. There is some fertile ground to make a ton of money here, provided you're the one selling the get-rich-quick seminars, books, and CDs. If you have a serious interest in professional investing and the time to learn, then go for it. But, you won't likely become a successful investor overnight. Save your money. Don't call that 800 number but discipline your life to fund consistent, methodical investment programs in financial instruments that you understand.

6. BECOME A CONVERT - Convert under-producing assets into higher producing assets. Equity in your home, low paying bank CDs, bare land that isn't rented, are all under-producing assets that could be leveraged into higher-return investments. Don't assume that having a long list of assets means you have a long-term financial plan. Surprisingly, even a cash-flowing rental property might fall into the category of under-producing assets. Converting under-producing assets takes a more sophisticated assessment but it is definitely worth investigating. If you already have the asset, make sure it's working as hard as it can. See a financial planner.

7. DON'T BE REVERSE AVERSE! - Evaluate the pros and cons of reverse mortgages very carefully. This doesn't work for everyone but it can be a helpful tool in creating income during retirement. A reverse mortgage can provide income for life but it's all based on your age and the equity in the home. There can be very high costs associated with the way some lenders do reverse mortgages so do your homework before you sign up for this one. If you would like to stay in your home for the rest of your life and you are willing to put that intention in writing then a reverse mortgage might be right for you. Make sure you have references or referrals for any broker you work with to put your reverse mortgage together.

8. LEVERAGE THE LIFE YOU HAVE - Taxes are a part of life so why not make life a part of taxes? We're talking life insurance here folks. Having a policy that is going to protect your loved ones once you die is important but there are other ways you can use life insurance as a tool to protect your assets and income. It's perfectly fine to talk with your life insurance agent about her ideas on this but get a second opinion and professional guidance from your accountant or retirement planning expert. If you've put off getting life insurance, premium financing (borrowing money to finance the cost of your insurance premiums) can open some very interesting financial opportunities. This requires professional guidance.

9. START POUNDING COMPOUNDING INTO YOUR HEAD - Every minute works to your advantage with compounding interest. Interest paid this year will gain more interest next year Make interest on your interest, on your interest. Well, you get the picture.

Even the most basic investment plan can be better than none if it allows for the proven benefit of compounding interest. The secret ingredient of compounding interest is just time on the clock. Whooaaa! There goes another two minutes and another two bucks? Remember, the next best thing to starting saving while you are young is to start NOW!

Retirement
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