retirement. The rule states that money approximately doubles in the number of years equal to 72 divided by the return generated. So if you earn 6 percent a year on your savings, your money would double in about 12 years (72/6 = 12). Therefore, approximately each decade that is delayed in saving for retirement could cost you the opportunity to double your money.
3. Save a percentage of your income, not a specific amount of money.
There are two key benefits to this approach to retirement saving, says Lerner. “The first is that it builds discipline. When you commit to putting a certain percentage of your income away for a long-term goal like retirement, you are saying ‘no’ to immediate gratification in order to help ensure your financial security later in life. “And the second benefit is that as your income hopefully rises over your life, the amount of money you save for retirement will automatically rise along with it.”
4. Make your retirement savings automatic.
By automating your retirement savings, you are “paying yourself first,” says Lerner. “Simply talk to your employer about having your retirement plan contribution automatically deducted from your paycheck each pay period and placed in your retirement account. Or if you contribute to a non-employer plan like an IRA, arrange to have your contribution automatically transferred from your bank account to your retirement account each month.”
5. Periodically rebalance your retirement plan assets.
Your retirement account isn’t something you can just put on cruise control and forget about. Over time, Lerner explains, the mix of stock, bond and cash assets in your account will likely shift away from the target asset allocation you originally started with. “Therefore, it’s often wise to periodically rebalance your account in order to get your asset allocation back to its target range,” says Lerner. “This may involve selling securities in assets that have become over-weighted and using the money to buy securities in assets that have become under-weighted.”
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC