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You know that if you want to make it throughr etir emen t, you need to plan now. And that planning should involve an investment plan. Your goals and individual needs will be a big part of the kind of investment portfolio you have to get you through your retirement years. Here are some steps to take in order to create your retirement investment plan:
1.Assess your risk: The first thing you need to do is consider your risk tolerance. This includes your emotional risk tolerance as well as financial. Decide how much risk you can handle, and consider your likely sources of income. Your asset allocation should be based around how much risk is appropriate as you work to build your investment portfolio.
2.Consider getting help: After assessing your financial situation, you need to determine whether or not you need help making a plan. There are plenty of free online calculators and tools that can help you, but you might feel more comfortable getting professional help. You need to decide, at that point, whether you just need a one-time session to work out a plan, or whether you need long term wealth management help.
3.Look at your possible withdrawal rate: Think about your expenses now, and estimate your expenses in
retirement. Think about your goals, and what you want to accomplish. Figure out how much money you will
need each month in order to meet your expenses \u2014 this includes insurance premiums, utilities, travel
expenses and other expenditures. Most financial experts recommend that you withdraw 4% of your assets in
year one of retirement, and then adjust forin f lation going forward. But your needs may be different, so
consider this carefully.
4.Consider possible income streams: When building a retirement portfolio, you will need to consider the
income streams that will cover your expenses. You can cushion your withdrawal rate by cultivating income
streams such as businesses and web sites. You can consider Social Security and any pension or inheritance
you might have. Look at your portfolio and determine whether you will need to shift some of your assets into
income investments like dividend paying stocks and bonds. Some even purchase an immediate annuity to
help provide an income stream, but you should carefully check to make sure such products are best for your
situation. A part-time job or hobby can also provide some of the income you need.
6.Remember taxes: Finally, consider the tax implications of your retirement accounts and investments. Some
retirement investment accounts, such as Roth accounts, grow tax-free, meaning you won\u2019t be taxed on the
withdrawals. Other, traditional, retirement accounts grow tax-deferred. This means your withdrawals, when
you make them, are taxed as regular income. You will also have to consider capital gains taxes on other
investment accounts. Consider withdrawing from tax-deferred accounts first, or rolling those accounts into
Roth accounts and getting the taxes out of the way before taxes rise.
As you begin investing in your future, make sure you put money into tax-advantaged accounts first. You\u2019ll get more
bang for your buck this way. Also, as the years progress, take stock of your retirement portfolio, and decide whether
your asset allocation needs to be tweaked according to changing circumstances in income and risk tolerance. Many
people shift their assets around as retirement approaches, preparing to live off their investments, rather than focusing
on growing them.
This action might not be possible to undo. Are you sure you want to continue?