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Rethinking Your Retirement Strategy |
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by Jan Van Vlimmeren
The average lifespan of people in the US keeps increasing every year thanks to the continuing increase in living standards and the advances in medicine. Because of this we have to rethink our retirement strategy as you will be consuming any savings you have for a longer period and the older you get, the higher your medical expenses will become.
If you are under 40, you should expect to put 10% of your income aside as savings towards your retirement if you wish to maintain a reasonable lifestyle. If you are over 40, you should commit a larger portion of your income towards this.
 Even if the existing financial crisis has shown us that they are not completely safe, retirement accounts still remain an interesting option to put our money. Many of these accounts are tax-deductible so do they offer an interesting bonus. Some of the employers are matching a portion of their employee contributions to the company's retirement account so next to the tax-deductibility, you will also get a nice extra from your employer.
Now more than ever is diversification key to a healthy retirement strategy. Next to the retirement accounts you should also consider investing in real estate. Having a house that is fully down paid by the time you are retiring is an incredible asset as otherwise the cost of living would be a serious dent in your budget. If you can acquire multiple real estate properties that you can rent out, you can probably enjoy your days maintaining your old lifestyle.
You might consider investing some of the money you set aside for retirement in shares and stock options. Don't forget that shares hold a risk and should be considered as long-term investments. Never use them as the sole point of your retirement strategy as you might risk losing a lot of money on them.
Another usually good way is investing in gold like Krugerrands and American Gold Eagles. Gold usually tends to keep its value without being influenced much by inflation. The recent years have however caused a boom in gold investors. This has caused the price of gold to rocket. While gold still is an interesting investment to diversify your portfolio, immediate profits might be slim but again, for a long term retirement strategy, they are a wise addition.
The closer you get to retirement you should also consider keeping some of the money as cash options. These are low risk, offer great flexibility and you don't have to liquidate any long term investments should you ever need any cash for an emergency situation like a hospitalization.
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