Five Steps to a Comfortable Retirement - Without Winning the
Lottery!
Copyright 2006 Kristine McKinley
You've probably heard about the Nebraska meatpackers who won the
largest lottery jackpot in the United States last week. One
winner replied "I've been retired for about four days now" when
asked what he would do with his winnings. His response did not
surprise me; I'm sure my reaction would be similar!
What does surprise me is that many Americans believe that they
cannot retire comfortably unless they win the lottery. A survey
by the Consumer Federation of America shows that 27% of
Americans believe that their best chance to gain $500,000 in
their lifetime is to win a sweepstakes or lottery.
Fortunately, building a comfortable retirement nest egg is
easier than you think. Here are five steps to help you build a
comfortable retirement:
1. Start early! If you started saving $100 a month beginning at
age 18, you would have over $500,000 by age 65. The power of
compounding is great, and the earlier you start saving, the
greater the benefit. The easiest way to get started is to enroll
in your company sponsored retirement plan. If your company
doesn't offer a retirement plan, signup for automatic
withdrawals to a Roth IRA or mutual fund.
2. Have a plan. The best way to ensure that you will have a
comfortable retirement is to plan how much you will need to
retire. Sit down with your family and decide what you'll do when
you retire, where you'll live and what your spending needs will
be. You can't reach your destination if you don't know where
you're going.
3. Participate in company sponsored retirement plans. Many
companies offer matching contributions to your 401K or other
retirement plan contributions. This is free money - take it!
4. Invest in a diversified portfolio of stocks and bonds, that
fits your goals and risk tolerance. Studies show that your
investment return is determined primarily by the allocation of
your assets, not the individual investment selections you make.
5. Keep your costs down. Invest in no-load, low cost mutual
funds (or other investments). Lowering the expenses in your
portfolio by just 1% can equate to 20% more money in your
portfolio after 20 years.
Although winning a large lottery certainly can't hurt, following
the steps above should send you well on your way to a
comfortable retirement.
Need more help? Contact a fee-only financial planner to help you
project your retirement needs and make a plan to retire in
comfort.