Savings Strategies when Approaching Retirement

The baby-boom generation is about to trail blaze into another new era: retirement. Never a generation to accept the status quo, they are ready and set to redefine the outmoded image of “golden years.” Forget about endless days spent in repose.  Retirement is about an unprecedented time of adventure, travel, creativity, and new business pursuits.

piggylead.jpgWhile these exciting changes will redefine aging, the question remains whether your retirement nest egg will be enough to finance your adventurous plans? Fortunately, there are plenty of things you can do—right now—to ensure you are on the right track toward fulfilling your retirement dreams. Here are some ideas:

Financial Objectives – How much money will you need in retirement depends on many factors including your desired lifestyle. Your CERTIFIED FINANCIAL PLANNERTM professional can help you identify your financial goals for retirement and build a customized financial plan to help attain them.  Reevaluating your financial goals and objectives now can be advantageous for achieving your future endeavors.

Maximize Contributions - Taking advantage of your employer’s retirement plan is a strategic money saving solution to fund your retirement goals.  Plan to contribute as much as the law will allow. In 2007, you can contribute up to $15,500 to an employer-sponsored 401(k) plan. Those over age 50 can contribute an additional $5,000. Many employers also match contributions, sometimes, by as much as 50–100%.

Make Additional Contributions – On top of contributing to your employer’s plan, you can save even more by opening your own Roth IRA. Contributions are made after taxes, but earnings and distributions are tax-free, provided you have owned the account for at least five years and have reached age 59½. Those age 50 and over can contribute $5,000 a year in 2007. Eligibility for these plans begins to phase out with adjusted gross incomes of $99,000–$114,000 for single filers and $156,000–$166,000 for joint filers.

Monitor Spending – Evaluate your spending habits and replace some of your discretionary spending with savings.  It is very important that you pay down debt now and avoid accruing new debt.

Build your Business - Many boomers hope to start their own businesses in retirement. But why wait? If you begin your entrepreneurial efforts now, your business has the potential to be in full swing by the time you finally do retire, and any profits between now and then can be added to your savings.

Income Sources – If you want to extend your retirement savings, consider staying on the job longer. Many people actually leave retirement to reenter the workforce because they feel more fulfilled in a working lifestyle. Others seek part-time work, consulting, or entrepreneurial efforts.  Understanding your potential income sources during retirement will help you evaluate whether your assets and savings will be sufficient to fund your retirement.

With all of the above options, time and compounding will be to your benefit. Each year that your savings remain untouched will give them more time for growth potential. Talk with your CERTIFIED FINANCIAL PLANNERTM professional to help identify your financial goals and opportunities for retirement.  Your adventure awaits – make sure you have the proper resources to usher change into a whole new era.