Does Your Savings Plan Need a Tune Up?

 

It’s smart to take your vehicles in for regular maintenance visits to avoid a breakdown or costly repair.  Creating a similar maintenance schedule for your retirement savings plan is equally smart.  There are many choices for building a retirement nest egg:  stocks, bonds, real estate, high-yield savings accounts, etc.  Each choice has its pros and cons, depending upon your financial plan and the economy.  Remember, the strategy you made at 40 may need updating by the time you reach 55.

Check under the hood

If you’re 10 years or less from retirement, it’s time to examine your financial plan.  Have your circumstances changed since you established your plan?  Weigh factors like working part-time in retirement, the value of a pension or other assets, etc.  Add expenses for new items like long-term care insurance or increased medical services.

Safety first

Your retirement goals may include risky hobbies like racing or skydiving – but shouldn’t include high-risk investments.  The ideal retirement portfolio should be a mix of stocks, bonds and shorter-term cash investments, such as CDs.  Generally it is advisable to move money in “safer” investments the closer you get to the point in time when you actually need to use the money.

Keep cash within reach

Stocks, bonds, real estate…these investment options must be liquidated before you can use the cash.  That can take time, and you could be forced to sell at a loss.  An interest-earning savings account of 12 to 18 months’ worth of living expenses, plus a cushion to handle surprises, will keep this money working for you.