Do you know what the Retirement Red Zone means?
If you have been watching the stock market, your uneasiness may be plunging as well. In this new reality that is now, there seem to be more questions than answers.
So, what is the Retirement Red Zone? It is not retirees playing flag football.
It is the 3-5 years before you plan on walking out the door from your retirement party at work. Every retirement need should already be in place for you to live comfortably in retirement.
30-year-old vs. 60-year-old - your wardrobe isn’t the only thing that should be different.
By the time most people hit their 30’s they start to plan their financial future. It’s time to start thinking about kids’ college funds, buying a home, saving for retirement, work pensions, and whatnot.
This time is called the ‘Accumulation’ phase because you can really have a nice accumulation the earlier you start. Options are everywhere, people are vying for your choice to invest in them whether its from brokers, work, or insurance.
You may hear lots of advice from everyone. You may even hear “you can do better in the market” but that is a red flag. Why?
Do you really want to put all your eggs in one basket? Cliché but true.
What everyone needs is a holistic approach to retirement planning. Combinations aren’t just good in the boxing world. You should have a combination of plans set in place for retirement income.
Don’t make the mistake of planning for your retirement at 60 years old. It should be an ongoing process because life happens and there are years when you can contribute more and some years where you need to scale back. What if your health changes and you need to retire early? Your portfolio at 30 is different than what you will need at 60.
It is your money, do not be afraid to ask questions.
Most Americans know what stocks are but don’t know what an annuity is. Thankfully, annuities are not affected by the stock market.
Getting ready for the distribution phase.
How is your money going to be distributed during your retirement years?
What’s it going to look like?
How long will it last?
Is it a lifetime income stream, or will you have to go back to work? Or can you retire early?
Many people dream about retiring early. It is possible and many do because they did the work during the accumulation phase of their life and were well informed of it.
The bad news now is that with the stock market going down it could have very big consequences especially if you have put all your money there.
It’s estimated that a 10 percent hit could mean a loss of 5 years of income.
That means that some folks may not be able to retire till later.
That is why it is so important to have your money spread out and safe.
Let’s look at the solutions that an annuity solves:
Safety-- it’s guaranteed.
Minimizes taxes
Ensures that retirement savings last a lifetime
Provides diversification
Keeps up with inflation
Protects principal
Legacy planning for beneficiaries
This is just an example of solutions there are many more it all depends on what your retirement goal is. A tailored plan for you and your family.
It is important to talk to experts from all points of view. It is easy for the public to assume that people in the “financial” world are all the same but please remember that for example, a stockbroker helps with wealth accumulation while financial consultants such as insurance agents focus on wealth preservation and accumulation.
Retirement needs are like football teams, they may look different every year but they all have the same goal: to make it to the SuperBowl.
Are you ready for the Retirement Red Zone?
