Prior to 2008, retirement tips were valuable bits of information that told you how to maximize your retirement funds using various proven retirement strategies that apparently worked. Since then, we have gone through a debilitating financial crisis that has not only invalidate most retirement strategies, but also broken retirement nest eggs that retirees are living off of. The collapse of the U.S. economy has even brought the viability of retirement into question for most Americans. In the face of this change, new retirement tips are making their appearance and most of them are oriented towards minimizing losses, reducing retirement dreams, and urging caution. Let’s take a look at some of them.
Retirements tips for the young worker are now emphasizing a realignment of expectations with the dreary economic scene. Of all workers, the youngest are in the best position to reap the benefits of living frugally. If they haven’t purchased their house yet, they can get one at a reduced price, but an expensive one, even if you can afford one, is out of the question. Recovery is a couple of decades away, and further dips until then are not out of the question. What may be affordable under your current income may not be affordable if you’re required to take pay cuts as the company you work for struggles to stay competitive. Cut back on your expenses; reduce your entertainment expense, buy a more inexpensive car, participate in car-pooling or take public transportation. Young workers, by virtue of their youth, are better positioned to allocate funds to stocks. Buying low now is unavoidable, since most stocks have decreased to their lowest level yet. Buy for the long-term—-you’ve got the time. If your employer matches your retirement contributions, take advantage of the plan. Roth 401Ks and IRAs are always a good choice. Set your retirement age further away. Contrary to the former wisdom, advisors are encouraging you to pay down your mortgage quickly. Diversify. Avoid borrowing from your 401Ks and keep abreast of retirement tips because the economy is dynamic and change may afford you new opportunities.
Retirement tips for the older worker are not as optimistic. Many have taken losses on their investments, and many have had their income reduced. There’s only one way to make up for that income loss: work longer or get a second job, if you can. Spend less, reduce you standard of living, reduce your savings for college education for your children and favor your retirement plan. Don’t step out of your employer’s retirement plan if they’re matching your contribution and try to contribute the maximum. Shift your investments from stocks to bonds, but hold on to your most promising stocks, those that may have taken a hit now but that are steadily increasing. By the time you retire, in ten or more years, they may be paying better than fixed-income investments. Postpone your retirement as long as you can. You’ll receive higher social security benefits, you’ll have a few year more to give your other retirement vehicles an opportunity to increase in value, and you’ll require less when you do retire. If your retirement plan status is bleak, you have to resign yourself to having no retirement at all, as a quarter of all U,S. workers have now done.
Those already in retirement need retirement tips that will repair their broken nest egg. This class requires the best advice available, for most are floundering. Reducing withdrawal rates, selling off, avoiding dubious loans may help, but for many, if possible, returning to work is the only hope. Advising a retiree to get out of retirement only goes to show how serious the problem is. Let us hope that retirement dreams are not replaced by dreams to retire before our lives are done.