Retirement Optimization

Retire On Track LLC.

To ensure a comfortable retirement, you must create a plan for retirement optimization.   The steps to creating the best possible retirement plan can be remarkably simple.  These steps include - Get out of debt, educate yourself, invest using your ideal asset allocation mix and check your progress.

Get Out of Debt

Most financial experts say you need at least 75 percent of your pre-retirement income to live comfortably in retirement.  This assumes that you do not have any debt obligations - the big three being mortgage, credit card and vehicle loans.  By eliminating debt in your retirement, you will only have to pay for essentials and the money you would have used to pay toward debt, can be used for nonessential items that make retirement so rewarding - like travel. 

If you plan to retire and still have debt obligations, then you must budget for the needed retirement income to cover these additional expenses.  Instead of the recommended minimum of 75 percent of your pre-retirement income to live comfortably in retirement, you will need 100 percent.  Want to travel extensively too? Well, then you will need 110 to 120 percent of your pre-retirement income to make this a reality. 

Educate yourself

A FREE subscription to the Financial Tips & Hints newsletter provides investment education in easy to understand terms, to help you, the individual investor.  The service is absolutely 100% FREE for everyone.  Providing intelligent retirement information is their passion. Through the Financial Tips & Hints newsletter, you will become informed and empowered to take over control of your investments.

Invest Using Your Ideal Asset Allocation Mix

Asset allocation of yesteryear used to be simple.  The formula was to subtract your age from 100.  This resulted in the percentage of your portfolio you should have invested in stocks.  For example: a 65-year-old would have 35% in stocks and 65% in bonds and cash.  But, due to longer life expectancies, you run the risk that your investments will not grow fast enough to last your lifetime, when following this formula. Try Bob's Free Retirement Calculator to see if your Retirement Funds will last a Lifetime?

In order to find your ideal mix, complete the short questionnaires located at MFS.com.  The questionnaire will result in an asset allocation strategy that should suit your individual needs.  The example to the right is one possible result from the completing the questionnaire. 

Once you have your ideal mix identified, you can plug these percentages into the Bob's Free Retirement Calculator.  This will help to identify if there is any shortfall with your current plan. If there is a shortfall, you can plan to work longer, take a smaller annual withdrawal amount and/or increase your savings rate.  Again, you can plug these "what if" scenarios into the retirement calculator until you no longer have an investment shortfall.  Your plan for retirement optimization is done, for now.

Check your progress

Just because you have determined your plan for retirement optimization, does not mean it will work for you for the rest of your life.  You should evaluate your mix after each life event (i.e. marriage, divorce, birth of a child, retirement, etc.) or at least every five years.  Again, through the use of Bob's free Retirement Calculator, you can view your retirement savings balance and plan your withdrawals for each year until the end of your retirement.  The results of your input assumptions are revealed instantly.