#retirement-planning

#retirement-planning

Corporate America is facing a silver tsunami - and some companies are better prepared than others. Walmart is redesigning jobs to keep older workers on the payroll. Microsoft is offering what it calls "wraparound care" to support healthy aging. Google is coaching its employees to prepare for retirement. Some smaller companies have introduced chief longevity officers to help workers navigate health, wellness, and the transition into retirement.

That way you can take full advantage of compound interest. Unfortunately, the longer you wait to get serious about saving and retirement, you begin to lose out on the power of compound interest. "Let's say you had $5,000 in a savings account that earns 5% in annual interest. In year one, you'd earn $250, giving you a new balance of $5,250. In year two, you would earn 5% or $262.50 on the larger balance of $5,250, giving you a new balance of $5,512.50."

According to the Employee Benefit Research Institute , more than 50% of Americans have less than $10,000 saved for retirement. This is a big concern, especially considering how shocking it is that a much smaller number have more than $500,000 tucked away for retirement. When you look at the data breakdown provided by the research, there is no question that it will shock people of all income and savings levels.

Northwestern Mutual's 2024 Planning and Progress study revealed the simple step that Americans have taken to double their retirement savings. According to the research, those who work with a financial advisor have around twice the retirement investment account balances compared to people who try to manage their retirement investing all on their own with no professional advice. The research showed that those who have a financial advisor guiding them have around $132,000 in retirement savings, compared with $62,000 among those with no advisor.

Retirement doesn't have to be location-dependent. In fact, some retirees ditch a permanent home altogether. Instead, they're embracing the "digital nomad" lifestyle, which allows them to go abroad to countries where the strength of the U.S. dollar lets them live a more luxurious lifestyle, or travel to places that have been on their bucket lists. This retirement model can look different from one retiree to the next.

Most people would probably be thrilled to reach the age of 50 with $3 million and a $1 million house. But this Reddit poster is having doubts about how well they're actually doing. And while that might seem surprising, the reality is that $3 million doesn't automatically guarantee financial freedom in today's economy, not when rising costs, longer lifespans, and shifting expectations can make even a large nest egg feel surprisingly fragile.

Whether you're already retired or planning for one, investing in retirement will require a balance of strategies that ensure income for the short term and long term. If you invest in the right types of exchange-traded funds (ETFs), you can build a diversified portfolio that ensures steady passive income and capital growth. With hundreds of ETFs in the market today, you need to be careful when you're picking one.

A payout worth several million dollars can tempt anyone, but experts say it is important to compare guaranteed income with potential investment results before deciding. Financial planners often point out that lump sums offer flexibility, control, and the ability to leave remaining funds to heirs. However, they also come with risk. Managing a large investment requires discipline, steady returns, and a clear understanding of how long the money needs to last.

Most people would probably be thrilled to reach the age of 50 with $3 million in investments and a $1 million home. On paper, it sounds like the definition of financial comfort. But for this Reddit poster, the numbers aren't translating into the sense of security they expected. Instead of feeling proud or relaxed, they're second-guessing whether they're anywhere close to "doing well."

First, if you're not familiar with ETFs, or exchange-traded funds, they're funds that invest in a bucket of assets. In the case of SCHD, the fund tracks the Dow Jones U.S. Dividend 100 Index. That index is comprised of high-quality U.S. businesses with at least 10 years of consistent dividend payments, and dividend payments that are deemed to be sustainable.

I recently came across a Reddit post from a soon-to-be retiree approaching his 60th birthday. His 401(k) balance was nearing $800,000, but the milestone made him step back and reevaluate his retirement goals and long-term strategy. This is a perfect example of how retirement planning isn't static. Goals shift, priorities evolve, and financial realities change. That's completely normal. What matters is adjusting your strategy intentionally rather than reacting without a plan.

It's also important to rebalance on an ongoing basis as you get closer to your spending target.As retirement approaches, we need to spend that money, so you want to de-risk your portfolio and build safer asset reserves. Investors age 50 and above really need to take notice of rebalancing. It's time to take some winnings and build safer assets that you could access if you needed to spend from your portfolio. Moving money into high-quality bonds removes risk and takes advantage of current attractive yields.

It is a curious pattern in human behavior. We trade our time, energy, and even our long-term health for money, yet once we finally accumulate it, many of us do everything possible to avoid spending it. People often cling to their savings long past the point when that money could meaningfully improve their quality of life. Behavioral economists note that this reluctance is rooted in loss aversion, the tendency to fear losing money more than we enjoy gaining it.

Given the inflationary forces at play in recent decades, achieving a seven-digit portfolio isn't what it once used to be. In fact, most personal finance experts recommend that baby boomers have, on average, around $900,000 saved for retirement in order to maintain most individual's lifestyles over the course of retirement. Of course, those planning some fancy vacations or spending money at a greater rate will need well over $1 million to fulfill these goals.

What is the 4% rule? Before addressing the concerns, it helps to understand what the 4 percent rule actually does. It is a simple guideline meant to help retirees avoid running out of money. The idea is to withdraw 4 percent in the first year and then increase that amount each year for inflation. This method has historically given retirees a high likelihood of their savings lasting three decades.

While Social Security benefits will help you fund your retirement, the fact that they replace only 40% of pre-retirement income means that, by themselves, they cannot provide you with a comfortable standard of living. Unless you're one of the small minority of workers who get a pension from your company, this means you must save enough to cover your costs and live the life you've hoped for in your later years.

I think the real question is not knowing if it's going to burst or boom. It's about making sure you'll be prepared for retirement, Brown Duckett told the outlet in an interview at TIAA's FutureWise conference earlier in the week. Brown Duckett added that investors should instead focus on building a diversified portfolio that includes guaranteed income through annuities or insurance products. It's not about timing the market. It's about how much time you put in the market, she said. Income has to be the outcome.