People planning to retire in the near future, those already retired and some transitioning to the post-work life have greater concerns about their investments than ever before.
Geopolitical events, the surge in inflation and the expected increases in interest rates understandably are causing people to worry about where their money is going and whether it will grow sufficiently to meet their retirement needs. But they shouldn’t let outside forces they can’t control overwhelm their ability to prioritize, adjust and invest wisely.
Here are six tips that can subtract anxiety and add more certainty to your investment strategy when you are nearing or in retirement:
1. Don’t give in to knee-jerk reactions
Turn off the mainstream media financial news programs and random Google searches. They are meant to stoke fear because fear gets viewers and readers. If you listen long enough or read lots of negative financial news, there’s a greater chance that you’ll end up making an ill-advised, poorly timed decision about your investments. Instead, let the curiosity that media sparks lead you to search out personalized advice.
2. Differentiate your money between short-term and long-term
People tend to treat all of their money the same. The financial industry sets it up that way in how it trains advisers. For example, some advisers will tell people that if they have $1 million, they can withdraw a certain percentage of that money every year and be fine. But that approach leads retirees to think that it’s all one pot of money that works just the same, regardless of what type of account they have used for their savings and how the account is invested.
This creates an incomplete picture because, in reality, they will use some money in the short term and some in the long term. For starters, simply by separating the money into those two time frames can help craft a smarter investment and income-distribution strategy.
3. Shore up your income streams
The transition from work to retirement is understandably uncomfortable. Before retirement, you got a steady paycheck from work, but in retirement, you want your money to do the paycheck work so you can go play. Shoring up retirement income streams gives retirees the comfort of knowing they have a certain amount coming in every month and every quarter. That security can change their whole emotional outlook in retirement. It can be the key to having more confidence to do the things they want to do.
It could be helpful to think differently about a retirement income stream. Instead of thinking about it as a percentage of withdrawal from accounts, consider dedicating resources …….
