Can You Retire On Time Debt Free?
The economy is unstable and the stock market has been take us down memory lane back to the days of severe recession.
Right now stocks are actually pretty risky and if you are bank rolling on the stock market you could end up losing the money you invested, not just any profits you have made.
The summarize here are 8 points you should consider to hedge your familys finances, their future, and please do not rely solely on your 401K to help you through a hard time:
1. You should be saving 30-35% of your take home pay into interest bearing accounts like bank or credit union CD's that you can save for shorter periods of time at higher interest rates. When they mature roll them into another high interest bearing CD and just keep reinvesting the initial amount and the profits. When they get to a favorable size split them in two CD's and keep investing the money and watch it compound and grow a lot faster and safer. Over time slowly invest back into the market using dollar cost averaging.
2. Consider moving a percentage of your 401K into an Roth IRA " the point is not to take all your money out of the 401K but rather just a portion of your employer sponsored 401K plan especially if your employer has a matching contribution to your 401K. Your employers contribution is free money for you to grow your 401K, so you do not want to lose that income stream.
3. One of the safest investing vehicles in the market place are bonds...your money is much more safer when you invest in bonds rather than stocks. and you don't have to worry about a depleting stock market.
4. Clear your debts before retirement. There is nothing worse than retiring and having to work at your local taco stand because you still have debt to pay off and can't enjoy your golden years. There you are standing next to some kid young enough to be your grandchild and having to call him/her boss. That is not a fun retirement.
5. Pay off your mortgage ahead of time while you are younger. Make an effort to pay your mortgage using a mortgage accelerator program and you could pay your mortgage off within 15 years instead of 30 years and save yourself the interest. The best part is that you can do this without spending more or changing your lifestyle.
6. By creating an emergency reserve in a separate financial company or bank, which is not linked to your current bank account, will allow you to avoid little withdrawals that will eat up your emergency funds.
7. One of the biggest mistakes home owners make is having their house insured at replacement value, not the market value of their home and the make the similar mistake when choosing the type of coverage for their cars. When you reside in a better neighbor or more expensive neighborhood, you do not want to insure your car at a state minimum value. A good way to reduce your insurance costs is to invest in a umbrella coverage, which will include your home, car...
8. Health insurance coverage is an immediate necessity. The cost of having surgery is astronomical. For example if you where to injure your knee while climbing the stairs, the surgery could cost you well over $8,500 and the doctors appointments and follow could be any where in the region of $9000.
The goal is to begin working on one item at time so that you do not get overwhelmed. The key is to set a timeframe and ensure you are able to complete each goal to protect your retirement income and your family in retirement.
Right now stocks are actually pretty risky and if you are bank rolling on the stock market you could end up losing the money you invested, not just any profits you have made.
The summarize here are 8 points you should consider to hedge your familys finances, their future, and please do not rely solely on your 401K to help you through a hard time:
1. You should be saving 30-35% of your take home pay into interest bearing accounts like bank or credit union CD's that you can save for shorter periods of time at higher interest rates. When they mature roll them into another high interest bearing CD and just keep reinvesting the initial amount and the profits. When they get to a favorable size split them in two CD's and keep investing the money and watch it compound and grow a lot faster and safer. Over time slowly invest back into the market using dollar cost averaging.
2. Consider moving a percentage of your 401K into an Roth IRA " the point is not to take all your money out of the 401K but rather just a portion of your employer sponsored 401K plan especially if your employer has a matching contribution to your 401K. Your employers contribution is free money for you to grow your 401K, so you do not want to lose that income stream.
3. One of the safest investing vehicles in the market place are bonds...your money is much more safer when you invest in bonds rather than stocks. and you don't have to worry about a depleting stock market.
4. Clear your debts before retirement. There is nothing worse than retiring and having to work at your local taco stand because you still have debt to pay off and can't enjoy your golden years. There you are standing next to some kid young enough to be your grandchild and having to call him/her boss. That is not a fun retirement.
5. Pay off your mortgage ahead of time while you are younger. Make an effort to pay your mortgage using a mortgage accelerator program and you could pay your mortgage off within 15 years instead of 30 years and save yourself the interest. The best part is that you can do this without spending more or changing your lifestyle.
6. By creating an emergency reserve in a separate financial company or bank, which is not linked to your current bank account, will allow you to avoid little withdrawals that will eat up your emergency funds.
7. One of the biggest mistakes home owners make is having their house insured at replacement value, not the market value of their home and the make the similar mistake when choosing the type of coverage for their cars. When you reside in a better neighbor or more expensive neighborhood, you do not want to insure your car at a state minimum value. A good way to reduce your insurance costs is to invest in a umbrella coverage, which will include your home, car...
8. Health insurance coverage is an immediate necessity. The cost of having surgery is astronomical. For example if you where to injure your knee while climbing the stairs, the surgery could cost you well over $8,500 and the doctors appointments and follow could be any where in the region of $9000.
The goal is to begin working on one item at time so that you do not get overwhelmed. The key is to set a timeframe and ensure you are able to complete each goal to protect your retirement income and your family in retirement.
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posted by Credit Counseling at
11:59 AM
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