Thinking about your retirement can be an overwhelming process. There are various factors to consider when estimating the kind of life you’ll have after leaving your career behind. You might feel like you need a financial advisor to get through all the information you need.
However, as daunting as this process can feel, it’s also now or never. If you don’t make smart investments soon, you could end up with a much less comfortable retirement than you want or deserve.
Thankfully, there are ways to invest in your future that will give you peace of mind and help ensure a happy and prosperous retirement. Here are some of the best investment strategies for retirement.
1. Open an IRA Account
If you’re not already doing so, you should open an IRA account. This will allow you to begin investing in a retirement account and building up your nest egg today – and that’s key if you want a comfortable retirement. Of course, you’ll have many years to continue contributing to your IRA and growing your retirement funds, but the sooner you get started, the better.
If your employer offers a retirement plan and you’re able to participate, then you want to do so. However, an IRA is your next best option if you’re self-employed or your employer doesn’t offer a retirement plan.
You can contribute up to $6,000 to an IRA account each year, and those funds can grow tax-free until you withdraw them in retirement, making this one of the top investment strategies for retirees.
2. Establish a Health Savings Account
If you’re in good health, you might be tempted to put off paying into a retirement account and focus instead on paying for health care costs in retirement. That’s a mistake.
Health care costs are rising yearly, and retirees need to have funds saved to pay for current and future health care bills. A Health Savings Account (HSA) is a type of savings account that people with high-deductible health insurance plans can open.
It’s designed to let you put money away each year to pay for current and future health care costs. And if you’re in good health and don’t expect to incur too many health care costs in the future, an HSA is an excellent way to invest in your retirement.
That’s because the money you put into an HSA grows tax-free, just like it would in a retirement account.
3. Delay Your SS Benefits
If you can work while you wait to qualify for benefits, delaying starting your Social Security payments as long as possible is part of your retirement income may make sense. Doing so allows you to continue contributing to your retirement funds and increasing their overall value.
Additionally, the longer you wait to receive Social Security benefits, the higher the payments will be. You can use an online Social Security calculator to determine when you should start receiving payments to get the highest possible amount.
4. Build a Cash Reserve
A cash reserve is an account where you store extra cash to help provide you with some peace of mind. It’s also something you should start building now to provide additional protection in case of a future financial crisis.
This way, you’ll be able to rest easy knowing you have a decent amount of cash set aside just in case. A cash reserve can help you pay for things like home or car repairs or even something as simple as an emergency flight home for a family member.
And you may be able to earn a little interest on your cash reserve, as well. But where should you keep your cash reserve? While a savings account is a good option, it doesn’t earn much interest – if any. A money market account is another option but has higher interest rates.
5. Have a Retirement Plan Withdrawal Strategy
If you’re already retired, it’s never too late to start investing and building a more prosperous future – but there is a likely time limit. The older you are, the less time you have left to invest and see those investments grow.
That’s why retirees should sit down and create a withdrawal strategy. You should know how much you want to withdraw each year, how much you have saved, and when you want to stop withdrawing money.
The last thing you want to do is run out of money before you die. You can use an online retirement calculator to help determine how much you should withdraw each year. Remember, though, that the numbers you see will only be true if you use the recommended rate of return.
6. Diversify Your Investment Portfolio
Sharing your investment portfolio among various types of investments will help protect you from losing all of your money in a stock market crash. For example, if you focus all of your investments on stocks and the stock market suffers a significant decline, you’ll likely lose a lot of money.
However, if you invest in various stocks, bonds, and other types of investments, you’re less likely to lose everything if the stock market suffers a downturn. Nonetheless, no matter how many investments you have, you can’t predict precisely how they’ll perform.
That’s why it’s essential to diversify your investment portfolio.
You could use Calc2Web.com as you decide which investments will help you the most along the way.
Top Investment Strategies for Retirement
If you act now, you can take advantage of these top investment strategies for retirement. If you’re already retired, it’s never too late to start investing and building a more prosperous future – but there is a time limit. The sooner you start, the more time your investments have to grow.
Want more information about retirement? Check out some of the other posts we’ve created in this section.