We all want to be able to have enough money for retirement. Many people are not on track to do so, which makes it paramount to understand what actually helps us get enough money for our older days!
A recent article from Smart Money listed three factors that are drivers of retirement success. Here they are, and I’ll follow with my comments.
- Employing a consistent, long-term savings and investing strategy
- Working with a financial adviser
- Saving money in your workplace retirement plan
Here are my thoughts:
- I absolutely agree with this. Being disciplined with our savings efforts, and doing in regularly over a long period of time, can do wonders for one’s retirement. It’s really straightforward in principle: save, do it regularly, do it early in life, get a solid rate of return, and let compounding work it’s magic. Now, there’s more to it, such as protecting cash inflow, managing one’s career, and diversifying income streams. In any event, regularly saving and investing consistently over a long period of time is a great practice.
- Hmmm. I manage my investments on my own. Would it help to have an adviser? Apparently, according to the article, it would. They show that people who have an adviser have a higher probability of replacing income in retirement than do those without an adviser. With me, it’s kind of a control factor, wanting to make the decisions on my finances individually. I’m not into sharing these decisions:) Plus, admittedly, there could be some hubris involved. Beyond that, however, I just feel safer managing my own money. Maybe this is something I should revisit, in terms of considering a financial planner.
- Yes, I agree with them on saving in a workplace retirement plan. When you do so, it can often become automatic. This aligns well with #1 above. Plus, when you consider that some employers offer a 401k match, it becomes an even more attractive option. When it comes to that retirement plan, think carefully before ever taking on a 401k loan, and just don’t use that 401k for credit card debt, needless to say!
As you can see, the one area for which I’m not totally on board is the adviser factor. I’d like to learn more about the study that yielded the findings quoted in the article, just for my own curiosity so I could better interpret the data. Who knows, I might be able to be convinced to revisit this one.
Also, their recommendation to save at least 10% is good, but I would suggest higher. To be fair, they did say “at least”.
Anyway, I’m all in on #1 and #3, and skeptical on tip #2.
My Questions for You:
What do you think about these tips? Any more that you would add?
Considering my own thoughts on advisers, I’m curious what yours are. Do you have one? Are you considering one? Feel free to convince me on your views:)