If I am self-employed, is there a similar program to save for retirement?
- How do I know if I will have enough money saved for my retirement?
- What are some of my main concerns as an individual investor when I think about managing my retirement portfolio?
- What are some strategies I can employ that may help me reach my post-retirement income goals?
- How much income do I really need for my retirement?
A self-employed person may open an individual retirement account (IRA) and contribute up to $5,000 per year if under age 50, or $6,000 per year if you are over age 50.
How do I know if I will have enough money saved for my retirement?
It is important to understand your financial picture today, what kind of income you will want to live on in your retirement years, and what other sources of income you will have (such as Social Security, pensions, insurance investments, and other after-tax investments). It is equally important to know if you will have any large debts, such as mortgages, college tuition payments, or student loans, as those will also affect your expenses. With compounding of investment income, reinvesting dividends, company matches, and getting an early start on investing for retirement, it may be easier to reach your retirement goal than you think.
What are some of my main concerns as an individual investor when I think about managing my retirement portfolio?
When you analyze your portfolio in order to achieve a long-term goal, such as having enough invested to provide resources into your retirement years, you generally must
What is a "retirement calculator"?
Widely available on the Internet, a retirement calculator allows you to input important variables, such as your income, how much money you have in retirement savings, and your expected Social Security income, to see where you would be today if you were to retire, and how much you need to start saving in order to retire and live comfortably some years into the future. The actual results of your savings plan depend on how early you start saving, how much you contribute to your plan, the rate of return of your investment choices, and how long you will live.
think of several considerations: How to make your investments grow and exceed the rate of inflation; selection of appropriate income-producing investments; and methods to preserve your investable principal or capital.
What are some strategies I can employ that may help me reach my post-retirement income goals?
Aside from the commonly held belief that you should begin investing for your retirement early on, in order to grow your money in early years, it is generally accepted that you should invest your money in equities (individual stocks or equity mutual funds), and manage your portfolio so that you may mitigate risk through proper diversification. In the medium term—and perhaps even during our retirement—you may require certain types of investments that produce income, such as interest-producing bonds or even dividend-paying stock investments. For more astute investors, purchasing bonds that have certain expiration dates is a prudent method to generate income during retirement. As the bonds mature, and the bond is paid to the bondholder, income is generated. As we reach our retirement years, many prudent investors look to investments that grow, but are of a more conservative investment type, as the cash alternative may erode because of inflation. This may be one of the biggest threats to maintain enough capital to fuel your retirement needs.
How much income do I really need for my retirement?
It is generally accepted that you need approximately 80% of your pre-retirement income in order to live comfortably during your retirement years.