Getting to retirement can be a difficult prospect for many people, especially if they are struggling to devise a strategy on how to properly save money in different portfolios. There can be so much to keep tabs on, many may just not know how to apply the ideal approach. High-risk and low-risk options can abound, but getting the right mix is often not easy.
This can be quite frustrating, but it’s understandable. Although saving for retirement can be challenging, taking the time to explore all options may help you become ready for your financial future.
While many people focus on stocks for their retirement, there may be some ways to jumpstart your savings with a little less involvement, overall. According to a report completed jointly between Michael Kitces, director of research at the Pinnacle Advisory Group and Wade Pfau, professor of retirement income at The American College of Financial Services, it isn’t completely necessary to invest a significant amount of money into stocks. Having only about one-fifth of all savings in stocks during retirement may be the key that you need to retire right.
The reasoning for this method is simple: it helps to cut down on risk, the report explained. Having a lowered risk can be important when markets become uncertain, and this can help many people deal with market fluctuation, especially the kind that people dealt with in the recent past.
“There are a lot of retirees in serious trouble because they bailed entirely in late 2008 or early 2009 because they couldn’t get comfortable with the volatility of a traditional portfolio,” Kitces, told The New York Times.
This type of discipline may be beneficial when the stock market takes a hit, as these investors may be able to avoid cashing out at a lower profit, the report noted.
Retirement may begin later on for some
Even with this new approach to retirement savings, some young people might have to reassess their financial strategies.
Nearly 60 percent of Americans who are considered to be in the middle class are more worried about paying off their bills than anything else, according to a report from Wells Fargo. This was notably higher than the 52 percent that was recorded last year.
When it comes to making a date to finally retire, many are still a little concerned they won’t be able to reach their goals. Just 52 percent think they can retire with the money they are saving, the report explained.
Whatever the strategy is that a person uses to improve their overall finances, it is important that something is consistently in the works. A lack of money saved now can only put a person at a disadvantage at a later date, while taking the time to improve retirement prospects can give a significant leg-up to reaching a comfortable level.