Gren Invest: Master Your Financial Journey
The foundation for financial freedom and the bedrock of anybody’s future is retirement planning. It’s not only about stopping work; it’s about creating a lifestyle that delivers the kinds of things you care about, including joy, comfort, and peace of mind. Getting to a financially secure retirement is a process of making smart decisions now that will yield benefits for decades to come. Traveling the world, doing something you’ve longed to do your entire life or just spending quality time with family and friends a good retirement planning turns these dreams into accomplished goals. Here in Gren Invest we believe that with the right knowledge and practical applying, anyone can take control of their financial destiny and build a secure tomorrow.
The path to retirement may seem overwhelming, but it has to begin somewhere. Read: How to Plan for Retirement Otherwise, looking at different retirement accounts, such as a 401(k) or an IRA, understanding Social Security and considering streams of income (like annuities or a pension) are all important pieces of a larger strategy. Creating a varied portfolio appropriate to your age and risk tolerance safeguards your savings from volatility, yet provides the possibility of substantial growth. Thanks to the power of compound interest, even small regular deposits can grow into a sizable nest egg over time. A sound plan not only funds your anticipated costs, but leaves cushion for unexpected needs such as medical care.
A good retirement doesn’t just happen. It takes discipline, vision and a life dedicated to learning. You want to be able to adjust your plan and respond to changing regulations, economic developments, and investment options and the more up-to-date you are, the better the choices you make! It’s about gaining the confidence to chart your financial journey with purpose.
We add more than just cosmetic advice at Gren Invest. We provide comprehensive coverage of retirement related topics including financial planning, investments, taxes, estate planning, and more to help you plan for retirement to fit your needs and your dreams. From early in your career to retirement, we are here to support you throughout your financial journey.
Explore the topics below to deepen your understanding, refine your strategy, and approach your retirement planning with the assurance and confidence you deserve.
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Top Questions Answered
The obvious answer is as soon as possible. The money you invest early in your career gets the most time to compound. Courtesy of Kseniya YudaevaEven small contributions in your 20s can significantly add up by the time you retire. If you are late to the game, do not be disheartened the point is to start now and be as consistent as possible.
There’s no one-size-fits-all answer, because it depends on your desired lifestyle, life span and when you plan to retire. A widely cited rule of thumb is the 4% rule, which says you can withdraw that much of your savings safely in year one of retirement and adjust for inflation every year after that. To get a sense of what you need, try to save about 25 times your target annual income.
A 401(k) is an employer-sponsored retirement savings plan that lets you invest a portion of your paycheck before taxes come out (in the case of a traditional 401(k)). Lots of employers will match the contributions you make to your retirement account up to a certain percentage, and that’s basically free money a jolt of added savings.
The key difference is the manner in which they are taxed. You typically can deduct contributions to a Traditional I.R.A., which means that you get a tax break now in exchange for having withdrawals that you take in retirement taxed as income. With a Roth I.R.A., you make your contributions with after-tax dollars (so there’s no immediate tax break), but your qualified withdrawals in retirement are entirely tax-free.
Social Security is the federal government program that provides income to retired workers and to disabled workers and their family members. For many, it is a valuable source of income in retirement, but generally not sufficient to live on in and of itself. On average, it replaces around 40 percent of pre-retirement income, so it should be treated as one component of your overall retirement plan, not the entire thing.
And if you’re self-employed, you have a number of good options. A SEP IRA lets you contribute a high percentage of your income; a SIMPLE IRA is simpler to establish. Another good option is a Solo 401(k), which lets you contribute as both the “employee” and “employer.” You can also open a Traditional and Roth IRA.
Annuity An annuity is a contract for a series of regular payments, either immediately or in the future, in exchange for a series of payments from you (or your beneficiary), usually either in a lump sum or in a series of payments. They can offer a guaranteed income stream in retirement, but they can also be complicated and carry hefty fees, which means it’s equally important to understand the terms.
As you near retirement, you usually want to make a transition in your portfolio from one that emphasizes growth to one that is more about preserving what you’ve amassed and generating income. This usually entailing cutting back on your allocation to riskier investments such as stocks and adding to more conservatively invested holdings like bonds or dividend-paying funds, so that your savings aren’t so vulnerable.
Your retirement may be threatened by a few risks. Market risk is the risk of investments losing value. Inflation risk is the risk that your savings will not grow fast enough to keep up with the cost of living. Longevity risk is the risk of outliving your retirement savings. Healthcare is also a significant, though frequently-attributed-to that-never-me moment we all are afraid of, retirement expense. Diversification and forethought will help to lessen these risks.
A reverse mortgage is a loan for homeowners 62 and older that uses the home’s equity as collateral. Unlike a conventional mortgage, you don’t make monthly payments. Instead, the loan is repaid when you (1) sell the house, (2) move out, (3) or die. It has it's uses as an addition to retirement income but there are some serious consequences that must be weighed.
Retirement Planning Essentials
Creating a secure retirement is one of the best financial goals you will ever pursue, it takes proper principles and planning. You want to be the one to make sure all the noise disappears.LanguageNext you need to let go of the corporate speak, I’d almost be willing to bet everything I have on the fact that before you began reading this article you had a definition in mind of what noise was. One enduring truth of saving for retirement is that time is your greatest asset. The sooner you start, the more time your money has to benefit from compound growth the process through which your earnings generate their own earnings. That exponential growth is why even small regular contributions made in your 20s or 30s can end up crushing larger amounts saved later in life. The first thing you can do is think about what you want to accomplish, and then stick to a disciplined savings plan. Whether you're looking to retire early, continue your current lifestyle, or pass down a legacy, consider if your strategy matches your own schedule and level of risk tolerance.
Your investment approach is determined by how you view your retirement goals. If retirement is many years down the road, you can probably afford to have a portfolio with a greater potential for growth, such as one heavy in stocks. The emphasis on aggressive growth wanes as you get close to retirement, and you start thinking more in terms of capital retention and perhaps such staid assets as bonds and dividend-paying stocks. This transition helps to protect the wealth you put into place from market drops that happen when you are most needing the money.
Diversification Another foundation for a sustainable retirement plan is the concept of diversification. If you own stocks, bonds and real estate, or other alternative investments, you’re diversified from the risk that any one investing decision tanks your entire financial holdings with no hope of ever recovering. If one asset class performs poorly, another might be doing great, giving you a much steadier and more predictable route to your financial goals. Some people will take risks from time to time and that’s not the point, it’s managing the level of risk.
And it’s important to know and take full advantage of your employer-sponsored retirement plans, such as a 401(k) especially if there’s a company match. An employer match is free money, essentially, and can dramatically speed up your savings. In addition to employer-sponsored plans, also take advantage of any additional tax-advantaged accounts such as traditional or Roth IRAs.
Finally, financial education is paramount. There are also a lot of changes in retirement planning, new rules and new investment products on the market. Remaining well informed, including by reading financial news, discussing with your trusted advisors, and by continuously reviewing your plan, you will be better able to make your decisions. Retirement planning is not a “set it and forget it” task as much as it is an ongoing series of adjustments and refinements. Incorporating these key tenets in the early stages, they become your guiding principles; helping you establish objectives, manage your assets, take advantage of all the tools at your disposal, and commit to continuous learning that will enable you to enjoy a financially secure and rewarding retirement.