While vacations and holidays typically provide a break for most of us, there is one big break ahead that's a priority on most everyone's calendar -- retirement. While it may be closer for some, we all should make sure we're financially prepared when the time comes to take a permanent day off! It's easier to think about if you break it down by the amount of time you have left until you retire.
10 Years or More You still have the advantage of time on your side. You might be able to afford to take on a little bit more risk with your investments and could benefit from compounding earnings if you reinvest the earnings into your portfolio.
Fewer than 10 Years It's time to start making subtle adjustments to your investment mix. Take a look at how your investments are allocated and making sure they appropriately match your risk tolerance, your investment objectives and your relatively short time horizon. Because you have less time to work with, you still want to have some investments that offer growth, but you also want to begin looking at preservation of principal.
Ready to Retire When you find yourself officially in the position to retire, you will have a whole different outlook on those funds you have set aside for just that purpose. Instead of making contributions to your retirement funds to help them grow, you'll be looking to maintain income from those investments. You'll likely begin taking distributions from them to pay for your day-to-day expenses. A thorough review of your investments will help you clearly see just how much you have saved, and how you will have to plan your distributions so you don't run short on funds during your retirement.
Financial preparation for retirement is something that is different for every individual. To make sure that you're on the right track, take the time now to assess your own situation and see what you can do to make sure you're ready when it's time for you to retire.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).