Retirement Case

Retirement is a very important aspect of life. Having retirement savings enables you to continue to live the way you have your whole working career without actually working, when you become of retirement age. Retirement is sometimes forced due to health reasons and no longer being able to perform the essential functions of your job, while for others it is a time to relax and enjoy your final years whether it is through travel, leisure, or building a business you never had time for previously. Retirement is a stage of life that requires significant planning and knowing what to expect and how to successfully plan will be key in having a stress free retirement.

Whether you are just starting to save for retirement or have been saving for years, creating a diversified investment portfolio would help to create a sensible retirement plan. An investment portfolio is a grouping of financial stocks and bonds as well as cash equivalents to make up a whole pie. Think of each section as parts of a pie. You have to find the perfect portions to suit your individual needs and expectations. When considering your portfolio you must consider which portion of it should be kept in stocks. As a general rule, it is said that, at the age you begin to save, subtract that number from one hundred in order to find the percentage of which should be stocks. An example of this is that if a 25 year old is beginning to invest in retirement, seventy-five percent of their portfolios should be stocks (100-75 =25, thus; causing the 25 year old to need to have 25% of their portfolio in bonds. The 67 year old who is embarking on retirement should hold 33% in stocks and 67% in bonds. Asset allocation is a strategy that aims to balance the risk and rewards. Some people are willing to risk more for the hopes of a greater reward while others like to play it safe. Finding the right balance for you is the most important thing. Yes there is a formula for what is common but that does not go to say that you must set up your individual portfolio in accordance with what is common, after all it is your retirement. (“Never bear too much risk, or too little”)

When looking at your investment savings for retirement, knowing your time horizon is important, this also helps you understand your ability to assume risk. There are three different time horizon terms. The first time horizon term is “Short-Term”. The short term time horizon is for individuals who are embarking on retirement in 5 years or less, meaning they will start spending in this time frame there is far less ability