Retirement planFidelty.com, an online financial company, recently published a report that shows the expected fall in retirement income. According to their survey, the average US citizen will experience an income deficit of 28% in retirement.
To be specific, the baby boomers will earn $2,100 less than their current expenditure, while their successors (the generation X of the 60s), will also need to struggle to earn an additional $1,700 to meet their estimated needs.
Still, things are not that bad. Generating enough income to cover these estimated shortfalls is not an impossible feat. However, in order to accomplish this, you need to act fast.
The following are some practical tips that you can use to improve your retirement prospects.Home Planning
No, we are not suggesting you to get a home equity loan, or a lifetime mortgage for your retirement. We are telling you to the exact opposite. Think about it, will you need the same housing facilities after retirement that you are currently accustomed to? Again, the emphasis is on need and not want.
You may want a mansion or penthouse for retirement, but let's get back to reality. Vouch for a smaller house, or alternately try relocating to a neighborhood that requires a cheaper standard of living. That way, you will have extra resources to save for retirement.
Purchase an Annuity
Annuities are designed to help American citizens during their retirement. However, lately annuities have got a lot of bad press, and not all criticisms are untrue. Most allowance plans are simply unaffordable, and by the end of the day the user is actually at loss.
But considering what we are after, purchasing an annuity is not a bad idea, as they help you to avoid the longevity risk i.e. the danger that you might outlive your income. With annuities, the benefit is that you will have at least some of your cash safely deposited for the future.
Prolong your Working Term
In other words, delay your retirement. This idea looks tough even while reading, but consider the benefits, the most obvious being extra income that can be saved for retirement. Working for additional years will also help you contribute a greater sum to your retirement plan (see next point).Go for the 401 (k) Saving Plan
Don't follow others in ignoring in saving plans like the 401 (k). Not only will employers put money in to equal contributions, but since money will be automatically deducted from your salary, you will be in a way "forced" to save, a habit that is extremely neccesary in the current economic climate.
Enhance your Stock Portfolio
Finally, if you have still not reached 40, think about increasing your stock portfolio by reducing provision to bonds. This is because past trends suggest an estimated 10% annual increase in sticks, and lower reliance of bonds can pretty much keep your stock returns with the 10%. However, if you have crossed 40, this move can be harmful, especially if your retirement coincides with a bearish trend.
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