Retirement Planning: 3 Essential Strategies
There’s a Chinese proverb that goes something like “The best time to plant a tree was 20 years ago, the second-best time is now.” Effective retirement planning is like this proverb. Smart investors are known to start saving in their early twenties; if that ship has sailed, the best time to start is today.
According to Investopedia, even if you’re between the ages of 55-64 and haven’t yet formulated a retirement plan, it’s not too late. However, you must act now.
In this blog, we’ll discuss 3 essential retirement planning strategies.
Invest in Stocks
Thanks to the power of compounding, it’s not unreasonable to expect a 7% rate of return on your investments. Historically, one of the safest and reliable investment areas has been the stock market, provided that you’re interested in investing for the long term.
But it’s also important to put out the disclosure that stock investments are speculative and you do run the risk of losing a significant chunk of your investment. Despite this risk, over the past 90 years, the annualized rate of return for the S&P 500 has been around 10%, which makes it a relatively safe avenue for investors.
Pay Off Debt
The earlier this is done, the better. Take advantage of your 401(k) to pay off your debts starting from the ones with the highest interest rates. It makes little sense to save for your retirement while delaying credit card debt that only compounds with time. Consult a financial advisor to formulate the best strategy.
Start an IRA
IRAs are like 401(k)s but with lower contribution limits. You’re only allowed to contribute $5,000—$6,000 if you’re above 50—but it also comes with several benefits such as the ability to invest in virtually any stock, ETF, bond, and other types of traditional investments.
IRAs don’t have to be set up via a company; this gives you greater control over your money. One viable method is by investing in precious metals such as gold and silver and placing them in your IRA account. This will serve to protect your investment from currency violability and might even boost your savings in the long run.
Orion Metal Exchange is a full-service precious metals investment service provider. We allow clients to purchase gold and silver bullions as part of their retirement savings and even offer storage services. Contact us today for more information.